Spot Re Edges Up A Touch, Forwards Fumble

The spot rupee closed marginally high at 48.9850/9950 against Friday close of 49.0175/0275 as the war tension eased a bit. Forward premiums also softened on the same account.

The Indian currency opened at 49.01/02 and the market was very thin till the last couple of hours of trading. Most of the deals happened in the range of 49.00-49.01. However, the news that India will allow Pakistani aircraft to use the Indian airspace, gave a boost to the sentiment and the rupee strengthened a bit against the greenback.

A dealer with a new private sector bank said, "Initially, trading was very thin. However, the sentiment improved in the afternoon. The rupee could have appreciated more but for the dollar selling by the public sector banks."

The forward premiums market saw the rates being range-bound. However, in the afternoon the rates dipped across the maturity. The six-month annualised premium closed at 5.85 per cent -- five basis points down from the Friday close of 5.90 per cent. The one-year premium dipped by three basis points to close at 5.52 per cent.

The spot rupee is likely to remain around the 49-mark against the dollar. The treasury head of a new private sector bank said, "We expect the dollar inflows to start streaming in the market as the border situation is easing off. However, it seems that the Reserve Bank of India (RBI) wants the rupee to remain around 49 and so it will be there only." Forward premiums are likely to dip further tomorrow. Forex dealers said that the six-month annualised premium is likely to hover in the range of 5.75-5.85 per cent tomorrow while the one-year premium should be in the range of 5.40-5.50 per cent.