Thin Trades Keep Re Ranged, Forwards Dip

The spot rupee closed at 48.26/27 against the US dollar for the second consecutive day amid thin trading volumes. Forward premiums fell marginally, with call rates remaining easy and government paper yields slipping further.

The Indian currency opened at 48.27/29. It remained in the range of 48.25 to 48.32 throughout the day. Dealers said the deals were stray and were struck at various levels at the same time.

Said a dealer with a private sector bank: "Today's stability of the spot rupee against the greenback was purely customer-driven. There was neither much supply from exporters nor was there any pressure from importers." He added that concerns over tension on the Indo-Pak border, that forced the rupee to dip substantially in the last week, were also a lot less.

The volume of rupee/euro trading was also low and the local currency closed at 42.94 against the euro -- unchanged from yesterday's level.

In the forward premiums market, too, the volume of transaction was low, though the rates dipped a bit. The 6-month annualised premium closed at 6.24 per cent as against yesterday's closing level of 6.26 per cent. The one-year premium ended the day at 6.04 per cent as against the yesterday's closing of 6.10 per cent.

A senior dealer with a private sector bank said: "Liquidity in the system has improved as a portion of the advance tax outflow is back in the system through government spending. This has pulled down call money rates, government paper yields and, consequently, the forward premiums."

The rupee is expected to remain in the range of 48.20 to 48.30 against the US dollar and 42.90 to 42.95 against the euro tomorrow.

In the forward premiums market, as the government paper yields are likely to go down further, rates should soften. Dealers said the six-month annualised premium should hover in the range of 6.20 per cent to 6.25 per cent tomorrow. The one-year premium is expected to be in the range of 5.90 per cent to six per cent.