Spot Re Touches Nadir, Forwards Look Up

The spot rupee plummeted to a new low today, to close 10 paise down at 47.1450/1550 after ruling at 47.15/16 levels. Forward premiums ended the day slightly higher.

The rupee opened lower at 47.05/06 against its Friday close of 47.04 and started falling to an intra-day low of 47.15/16 in the morning with nationalised banks buying huge quantities. The currency saw some business at that levels.

"The rupee fell primarily due to less supplies and good demand. Supplies came in from some exporters and a few leftover weekend supplies. The demand far outstripped supply, pushing the rupee lower," said a dealer with a new private sector bank.

"The rupee is likely to stabilise in the 47.15-47.20 range, with some long overdue correction in the value. As premiums moving only marginally, it is likely that today's buying spree was okayed by Reserve Bank of India (RBI)," said a dealer with a foreign bank.

"Though tomorrow the demand is expected to spill over in the morning, the rupee is expected to remain range-bound between 47.15 and 47.20. The pressure on the currency was added by supply scarcity with exporters also holding back their hoards," a foreign exchange dealer said.

The reference rate for the dollar, according to the RBI, is at 47.07 against 47.04 on Friday. Tomorrow the spot rupee is expected to keep a broad range of 47.10-47.20, with it seen to open slightly weaker compared with today's close.

Forward premiums closed marginally higher, despite volatility in the spot rupee. The six-month annualised premium closed at 4.75 per cent, while the one-year annualised ended at 4.72 per cent.

"There is no panic in the market, else forward premiums, too, would have rose in tandem. On the long end the premiums closed higher by around two paise," said a dealer with a private sector bank.

Tomorrow the premiums are expected to be range-bound despite movement in the spot rupee.