$ Buying By State-Run Banks Snaps Spot Surge

The rupee closed at 48.66/6650 against the US dollar today as against Friday's closing of 48.66/67. Forward premiums remained around the same levels as Friday.

The spot rupee opened at 48.6750/6800 and touched the day's high of 48.6525. However, at these levels, some public sector banks (including the State Bank of India) bought dollars from the market. This weakened the rupee, and the Indian currency finished the day at 48.66/6650.

Said a dealer with a new private sector bank: "There were good supplies of dollars from exporters to go along with the remittances from abroad. On the other hand, demand for the greenback was very low as the New York market was closed."

 

In the forward premiums market, rates remained stable. The six-month annualised premium closed at 5.44 per cent as compared with Friday's closing of 5.45 per cent. The one-year premium closed at Friday's level of 5.22 per cent.

Said the treasury head of a private sector banks: "As the New York market remained closed today, there was very little trading in the forwards market which kept the rates steady."

The spot rupee is likely to remain in the range of 48.60 to 48.70 tomorrow. A dealer with a private sector bank said: "It seems that the Reserve Bank of India wants to keep the Indian currency in this range. There have been good dollar supplies on account of remittances over the last couple of weeks. But the central banks has prevented the rupee from appreciating, to help the exporters."

Forward premiums may go up a bit tomorrow. Dealers said the six-month annualised premium should hover in the range of 5.40 per cent to 5.50 per cent and the one-year premium is expected between 5.20 per cent and 5.30 per cent. Said the treasury head of a foreign bank: "The market feels the premiums have reached the bottom and only a rate cut can push it further down."