Spot Rupee On New Floor, Jalanspeak Hits Forwards

The spot rupee closed the day at 47.0250/0275 after a day of extensive buying from nearly all banks for remittances. The forward premiums came off during the day on the back of statements from the RBI governor for softer interest rates.

"The spot opened lower due to demand from oil companies. This remittance is expected to continue through this week, along with some diamond remittance also to contribute to the demand," said a dealer with a new private sector bank.

The supply continued to be scarce keeping the rupee in a narrow range of two paise of 47.01 to 47.03 after falling to an intra-day low of 47.05/0550. "The spot rupee continued to remain biddish even today. Some of the supply is believed to be from foreign institutional investors selling through foreign banks," he added.

"The spot rupee continued to remain biddish today, slipping as most banks bought dollars today with Bank of Baroda, one of the largest purchasers bought consistently. The late afternoon trades saw Bank of India selling the greenback," said a foreign exchange dealer.

The Reserve Bank of India's reference rate for the dollar is 47.04 as against 47.02 from Tuesday. Tomorrow, the spot rupee is expected to open 1.5 to 2 paise lower as the spot date will change from Friday to Monday, increasing the carryover cost.

"It should keep a range of 47.03 to 47.08, probably touching its all time intra-day low of 46.10," said a dealer with a foreign bank.

Dealers even expect some profit-booking tomorrow as the spot rupee inches closer to the level of 47.10.

The forward premiums opened lower and proceeded through the day to fall even lower. The six-month(annualised) closed the day at 4.80 per cent while the one-year (annualised) closed the day at 4.85 per cent.

"There was very little activity on the premiums front. The premiums eased off after the RBI governor's statement on softer interest rates. The premiums came off by about four paise on the far forwards," said a dealer with a private sector bank.

Tomorrow the premiums are expected to ease towards the 4.60 to 4.70 per cent range. "Unless the rupee comes under a great deal of pressure, the spot rupee should continue to slide lower slowly," he added.