Rupee Dips A Shade, Forwards Strengthen

FOREX REPORT

The rupee weakened marginally against the dollar, depreciating by one paise, in the inter-bank forex market yesterday. It closed at 35.865-87. The forward dollar also strengthened in the face of rising paying pressure with the six- month annualised premium closing at 7.25 per cent.

The rupee opened at 35.85-86, slightly stronger than the previous days close of 35.86-87. However, steady corporate demand for the American currency throughout the day saw the rupee losing ground. Dealers attribute the excess demand to month end paying pressure. In the course of the day the rupee slipped to 35.875. Neither the Reserve Bank of India nor the State Bank of India was present in the market.

The cash tom was -.75/par, the tom-spot was -.5/par, and the cash-spot was -1/par. The forwards segment was fairly active with importers coming in to book forward cover. This pushed up the premiums by at least three paise. Some dealers said there was some conversion of FCNR(B) funds with banks which added to the upward pressure on the premiums. Nevertheless, volumes in both spot and forward markets remained quite thin. The monthly premiums in paise were 9-11 for February, 31-34 for March, 57-59 for April, 79-81 for May, 105-107 for June, 128-130 for July, and 149-152 for August. The one-year forward premium was 240-250 paise.