Rupee Moves Up A Tad, Forwards Decline

FOREX REPORT

The rupee remained strong against the dollar in the inter-bank forex market, closing at 35.79-80 yesterday. Forward premiums slipped sharply following expectations of development of a rupee yield curve. The six-month annualised closed at 4.7 per cent.

The credit policy has led to expectations of easy liquidity conditions in both the money and forex markets, and lower yields on the rupee. The spot market remained fairly inactive with the rupee appreciating marginally. The rupee opened at 35.81-82 and then climbed upwards as demand for the the greenback was not forthcoming.

Cash-tom and cash-spot were also easy and traded at 0/0 and at 0/.25 paise, respectively.

Fervent action was witnessed in the forwards segment. Expectations of lower rupee yields in the medium to long term saw banks and corporates receiving the premium aggressively. While there was some paying interest on account of profit-taking by banks, who received at higher levels and paid at lower levels, receiving pressure outstripped paying pressure.

Monthly premiums in paise were 0-2 for April, 6-9 for May, 19-24 for June, 37-42 for July, 58-64 for August, 75-82 for September and 93-100 for October. One year premiums were 225-240 paise.

The rupee closed at 58.22 against the pound, 1.77 against the mark and 28.5 per 100 yen.