Re Firm Against Dollar, Forwards Soften

FOREX REPORT

The rupee held its ground against the dollar and closed at 35.75-76 in a quiet inter-bank forex market yesterday. Forward premiums softened further with the six month annualised closing at 4.34 per cent.

The spot market was also very quiet. The spot rupee opened at 35.76-77. While the supply of dollars remained good, demand continued to remain low. However, the supplies were not excessive and hence the rupee climbed by only one piase during the day. The Reserve Bank of India was a passive spectator in the market. Its reference rate was 35.77 per dollar.

The cash-tom and tom-spot were -.25/.25 paise each, while the cash-spot was -.5/.5 paise.

The forward premiums continued to soften due to pressure resulting from arbitrage activities of banks, and continued supply from exporters. Since the rupee is selling for a discount against the dollar, banks have been purchasing the dollar spot and selling it forward, earning a higher return.

Monthly premiums in paise were 0-1 for April, 4-6 for May, 14-17 for June, 30-33 for July, 48-51 for August, 63-66 for September, and 79-81 for October. The one year premiums were 149-159 paise.

Overseas, the international markets remained lacklustre. The rupee remained fairly steady against other major global currencies, closing at 58.30 against the pound, 20.84 against the mark, and 28.35 per 100 yen.