Dollar Forward Premia Up, Spot Firmer At 38.94

Dollar Forward premia were up by up to 157 basis points yesterday on increased covering by corporates, estimated at $70-80 million by market sources. The one-, three- and six-month forwards closed at 12.54%, 16.75% and 15.95%, respectively against 11.83%, 15.18% and 14.64% on Thursday.

In the spot market, the rupee weakened to close at 38.92-94 from the previous close of 38.88-90. Fresh dollar demand, led by the SBI, put renewed pressure on the rupee even as the RBI refused to intervene.

Calls were range-bound at 8.75- 9.20%. The STCI weighted average was at 9.06% on a turnover of Rs 1,700 crore. At the fixed rate repos, the RBI mopped up Rs 718 crore while retaining the cut-off yield at the auction of 14-day and 91-day T-bills at 7.32% and 7.35%.

Market sources said the finance secretarys statement on Thursday that the Reserve Bank would not sell forward in excess of 10% of forex reserves made the market nervous.