Spot Ranged, Forwards Up On Holiday Coverings

The spot rupee was traded in a 47.1250-47.13 range today amidst low trading volume. Forward premiums jumped at the end of the day as players went for covering their products because of the two consecutive holidays.

The spot rupee opened a bit higher at 47.13 compared with Friday's closing of 47.1250 as banks were covering their products on account of the holidays in the next two days. The rupee, however, strengthened during the day to close at 47.1250.

"The forex market has been dull for the past few days and the same trend continued today," said a dealer with a new private sector bank.

The Reserve Bank of India's (RBI) reference rate was 47.13 for the dollar, unchanged from Friday's level.

Dealers said the demand for dollar was mostly from private and foreign banks, while the public sector banks were the main suppliers. Forward premiums remained unchanged throughout the day and rose by the end of trading.

The six-month forward premium closed at 4.80 per cent compared with 4.75 per cent on Friday, while the one-year premium closed at 4.84 per cent (4.82 per cent on Friday).

The spot rupee is likely to remain range-bound in a 47.12-47.15 band on Thursday. A dealer said, "There are two reasons for the rupee remaining range-bound for the time being -- the weakening of the dollar against other major currencies and the Reserve Bank of India has enough reserves to support the rupee if it starts falling drastically."

Dealers are also expecting the forward premiums to remain steady. The treasury head at a private sector bank said, "Call rates are likely to remain stable and soft. As the forward premiums generally track the overnight rates, they are likely to remain stable around the current level."