Spot In Shallow Range, Stable Fx Mart Keeps Forwards Steady

The spot rupee traded in a very thin range of 48.005 to 48.04 on Friday as against Thursday's range of 48.02 to 48.08. Forward premiums remained rock steady on the back of a very stable forex market condition.

The spot rupee opened in the range of 48.03/04 in the morning, but gradually strengthened during the day to touch an intra-day high of 48.005. The unit, however, weakened a bit in the afternoon to close at 48.02/03.

A dealer with a private bank said: "Demand was very thin in the market. On the other hand, lots of export proceeds have also entered the market. This helped the rupee to strengthen." Dealers said, as the Indian unit came close to 48-mark, the public sector banks arrested the rise in rupee by buying dollars. A dealer with a foreign bank said, "it seemed that the public sector banks were trying to protect exporters' interest."

The forward premiums remained little changed today in tandem with the spot rupee. The 6-month premium closed at 6.20 per cent as against yesterday's close of 6.18 per cent and the one-year premium closed at 6.01 per cent as against yesterday's closing of 5.98 per cent.

The rupee is likely to remain stable and may be traded in the range of 48 to 48.10 in the next week as the dealers expect more supplies from the exporters should come to the market. A dealer with a private sector bank said: "There has been no demand from the importers now-a-days. The exporters are also bringing back their proceeds. So we do not expect the rupee to weaken drastically." Dealers, however, do not expect the rupee to strengthen well over the 48-mark.

Forward premiums are likely remain stable with a softening bias. Dealers expect the 6-month premium to come below 6.15 per cent, while the one-year premium should go below 5.90 per cent next week. A forex dealer said, "if the forex market remains stable and the call rates hover around the seven per cent, forwards should ease gradually during the week." Dealers, however, said the any major change in the international political scenario will have a bearing on both the spot and forward market.