Spot Range-Bound, Forwards Stable

FOREX REPORT

The spot rupee closed 43.97 yesterday, five paisa lower over Friday's close with greenbacks being well bid in the market. Dealers said the rupee moved in a 9-paise range yesterday, between a high of 43.9450 and a low of 44.04, in line with expectations of the rupee trading within a five paisa on either side of Rs 44.

The forward premiums moved in a two-three paise, closing lower than Friday's levels but with no signs of a change in trend.

The rupee witnessed a few major movements yesterday," said a dealer with a private sector bank. "The rupee was marginally weaker in the morning and touched its intra-day high of 44.04 within the opening hour," he added.

There continued to be reasonable demand for dollar in the morning session and a slight pinch was felt in supplies. "Buying pushed the spot rupee to the 44 levels, but the Reserve Bank of India (RBI) ensured that it fell below the psychological barrier before it closed for the day," said a banker with a foreign bank. But there were no reports of RBI intervention in the market, though nationalised banks were said to be selling through the day.

"The spot rupee today is likely to remain in the 43.95-44.05 band. The inclination to buy is still prevalent and today one could see the spot rupee even touching the 44.10 levels, if the RBI goes along with the view that the rupee should settle outside Rs 44 levels," said a broker with a private sector bank.

A foreign bank dealer explained that if the rupee sustains at the lower end, demand will continue to telescope into the market. "If the RBI wants the rupee to depreciate more, it should sustain at the current levels," he said.

The forward premiums, following the rupee movements, were stable and range-bound, and, not moving more than two paise on an aggregate.