Spot Rupee In A Tight Band, Forwards Slumberous

The spot rupee were traded in the tight range of 47.1150-47.1250 today while the volume of trading remained low notwithstanding the Fed rate cut. Forward premiums also remained little changed from Monday's level on the back of steady call rates around the refinance rate of seven per cent.

The spot rupee opened around 47.1150-47.12. The Indian currency, however, weakened a bit during the day to close around 47.12-47.1250.

"The forex market has been dull for quite some time and today was no exception," said a dealer with a new private sector bank.

Dealers said that most of the deals were executed around 47.1225. The Reserve Bank of India's (RBI) reference rate was 47.12 against 47.13 on Monday.

Dealers said that it was the private and foreign banks from whom the demand came mostly, while the public sector banks were the main dollar suppliers.

Forward premiums remained unchanged throughout the day tracking call rates. The six-month premium slipped marginally to 4.78 per cent compared with 4.80 per cent on Monday and one-year forward closed at 4.85 per cent, little changed from 4.84 per cent on Monday.

A forex dealer said, "As call rates have remained steady and soft so are forward premiums." A dealer said, "From the previous experience, the feeling was that the Fed decision might not be followed by the RBI and, hence, despite a cut in the Fed rate there was no major impact on forward premiums."

The spot rupee is likely to remain rangebound around 47.11-47.14 tomorrow. A dealer said, "We are not expecting the rupee to depreciate or appreciate in a major way in the near future as there is no real threat or boost being foreseen."

Dealers are also expecting forward premiums to remain steady. The treasury head of a private sector bank said, "Call rates are likely to remain stable around the seven per cent level on the reporting Friday and as forward premiums are generally guided by the overnight rate, they are likely to remain stable around the current levels.