Spot Rupee Seen Around 47.10

The week should see the rupee continuing to remain stable. The local currency is expected to keep a range between 47.10 and 47.15 against the US dollar. Forward premiums are likely to dip on expectations of a US rate-cut.

"The rupee will continue to stay stable -- it has been keeping a 2 to 5 paise range for the past 2 to 3 weeks. For the coming week, or the next 10 days, the spot rupee is expected to keep a 47.11-47.15 range," said a dealer with a new private sector bank.

"The demand for dollars has been missing for a while now. Supplies have been consistent, but scarce. This situation is likely to continue for some more time as there are no fresh market-moving factors. Chances of a domestic rate cut any time soon are remote," said a dealer with a public sector bank.

On Friday, the spot rupee remained rangebound between 47.11 and 47.1225, maintaining a narrow range due to very little buying interest. The local unit ended the day at its opening level of 47.1225 after nationalised banks brought through the day (though not large amounts). On Friday, the Reserve Bank of India's (RBI) reference rate was Rs 47.13.

Premiums are also expected to remain calm this week. This despite expectations of a US Fed rate-cut in view of the Federal Open Market Committee (FOMC) meet on 21 August.

On Friday the 6 months (annualised) premium ended at 4.75 per cent, while the one year (annualised) finished a 4.82 per cent.

"Premiums could also be bid beginning Monday on account of the FOMC meet. Since a 25 basis points rate cut is expected, premiums could see an upward revision of about 10 basis points. But, if the Fed rate-cut is by 50 basis points, premiums could rise disproportionately in the coming week," said a dealer with a foreign bank.

Exporters are advised to only book their near terms, while importers should to stay away from the market. The 6 months (annualised) premium should keep a range between 4.65 and 4.85 per cent.