Spot Gains On Eefc, Credit Policy News
The spot rupee closed strong at 46.02/04 reacting to the news of the review of Exchange Earners Foreign Currency (EEFC) scheme being brought under consideration. Forward premiums, on the back of a stable spot rupee, came off 3-4 paise across the board.
"The spot rupee opened strong and remained range bound around 46.04-46.07 throughout the day. There was some selling towards the end resulting in the rupee coming off and closing at around 46.02/04," said a dealer with a foreign bank.
"The rupee closed strong due to the news of announcement of the credit policy and the tentative scrapping of the EEFC scheme," he added.
The demand for the dollar was on the lower side and the volumes being traded extremely thin. As the rupee reached the lower end, some nationalised banks were selling. This coupled with some import cancellations increasing the supply.
The Reserve Bank of India's reference rate was 46.07 as against 46.17 on Thursday.
In the coming week the spot rupee should remain range bound around 46-46.15 on the lower end. "The rupee should remain strong this week, after the announcement of the credit policy date. That announcement itself has improved the market sentiment further," said a dealer with a private sector bank.
Forward premiums came off during the day on the back of a stable spot rupee. It came off by about 25 basis points or about 3-5 paise. The six-month annualised premium closed at 4.80 per cent as against 5.06 per cent on Thursday. The one-year annualised premium closed at 4.66 per cent as against 4.87 per cent on Thursday.
"Forward premiums came off today due to the announcement of the credit policy date. Not too many measures are expected in the policy but the market reacted to the news nevertheless. Also nearly Rs 20,000 crore is expected to come into the market if the RIB-II goes through. That has also raised the sentiment in the market," a dealer said.