Rupee, Forwards Likely To Remain Steady

FOREX MARKET

The rupee is expected to remain steady against the dollar, moving in the range of 35.77 and 35.86 in the inter-bank forex market this week.

The forward premium curve on the greenback is realigning itself in light of the emergence of a new rupee yield curve. The forwards should remain steady with the six-month annualised at 4.5 per cent to 5.5 per cent.

The steady inflow of the American currency is expected to continue as corporates scurry to get the best rates possible for their remittances.

Importers, meanwhile, are comfortable as they do not expect any sharp rupee depreciation in the short run. The RBI is likely to phase out intervention, allowing the rupee-dollar parity to be determined by market fundamentals.

During the last week, the rupee strengthened to 35.79 on April 15, the day on which the slack season monetary policy was announced. This was the highest value for the rupee in 1997. These levels are expected to continue for some time as easy liquidity conditions in both the money and the forex markets prevail.

In the forward segment, the premiums are may remain soft as exporters continue to sell their forward dollars. Inter-bank profit-taking, (that is, receiving at higher levels and paying at lower levels), is expected to continue.