Supplies Keep Rupee Around 46.96, Forwards Dip

The rupee remained in a narrow range of 46.96-46.99 today on the back of good supplies from foreign banks. Forward premiums ended lower tracking low call rates following inflows on account of redemption and coupon payments on government securities.

The currency opened at 46.99 against the greenback and strengthened as dealers said there has been good supplies from exporters through foreign banks. The rupee closed at 46.965 at the end of the day.

Dealers said that the currency would have hardened more, but for the political uncertainty. A dealer with a foreign bank said, "The worry on account of a rise in global oil prices is no more there, but the players are still concerned over the political instability."

Dealers said that nationalised banks, which had been observed to support the rupee once it crossed the 47-mark on Tuesday, was found to unwind some of their positions."

Forward premiums, however, dipped a bit as the overnight rates eased. The six-month annualised premium came down slightly below the five-per cent mark as call rates closed at seven per cent.

The rupee is likely to remain range-bound tomorrow with little downward bias. A dealer said, "The rupee is likely to hover around 47 and may cross that limit. As the Reserve Bank of India, governor said that the recent fall in the rupee was normal, the central bank is not likely to intervene to restrict the fall as well." Analysts feel that the rupee is overvalued by more than two per cent against the dollar.

Forward premiums are likely to track the call market and remained stable. A dealer with a nationalised bank said, "The overnight rates are likely to remain stable in the 7-7.50 per cent band and hence we do not expect any sharp movements in the premiums as well."