Spot Re Winds Up Higher, Forwards Follow Suit

Spot rupee strengthened to close at 47.9650/ 9700 per dollar compared with Friday's closing of 47.98/ 99 amid low level of trading. The local currency had opened in the 47.98/ 9850 band.

Forward premiums went up marginally as the expectations of a repo rate cut were belied.

"Trading was dull and rangebound. There was no pressure from the demand or supply side," a dealer with a private bank said.

Higher forward premiums drew some importers to hedge positions in the spot market, but weekend dollar supplies were significant enough to meet their purchases, dealers said.

They said public sector banks were the main dollar buyers, while foreign and private sector banks were the main suppliers.

Forward premiums inched up even though call rates remained soft in the 6.60-6.90 per cent level. The six-month premium closed at 6.10 per cent as against Friday's closing of six per cent. The one-year premium closed at 5.90 per as against Friday's closing of 5.80 per cent.

According to a dealer, buzz of a repo rate cut was in the air due to which call money rates were expected to go under the 6.50 per cent mark. "But this did not happen, resulting in some pressure on forward premiums," he said.

Dealers said only few trades took place in forwards. The rupee is likely to remain stable and be traded in the 47.95-48.05 band tomorrow. Traders said the outlook for the rupee was bullish after a fall in global crude prices to below $20 a barrel for the first time in more than two years.

"Trading is likely to remain dull tomorrow and the local currency should hover around 48 per dollar. It could rise to 47.90 but for demand from public sector banks," said a dealer with a private sector bank.

Forward premiums might remain around today's level as call is seen stable. Dealers expect the six-month premium to be traded in the 5.95-6.05 per cent range tomorrow, while the one-year premium should be in the 5.75-5.85 per cent band.