Dollar Inflows Prop Spot, Premiums Climb Down

The spot rupee remained volatile today amid lower trading volumes. Forward premiums softened at the longer end of the market even as call rates stayed low on a reporting Friday.

The rupee opened at 48.71/72. It then moved down to touch the 48.76/77 levels, as state-run banks mopped up the dollars.

The dollar inflows on account of foreign investment flow helped the rupee recover to the 48.71/72 levels.

However, at this level public sector banks intervened by mopping up dollars resulting in the rupee closing at 48.7400/7450.

In the forward premiums market, breaking the trend seen this week, the rates came down today.

 

The six-month annualised forward premium closed at 6.10 per cent -- same as Thursday's closing. The one-year premium dipped by 15 basis points to close at 5.20 per cent.

A dealer with a foreign bank said, "The government paper yields went up a bit. But, call rates, though slightly high in the beginning, came down during the later part of the day. It resulted in the forward premiums coming down a bit."

The spot rupee is likely to hover in the 48.65-48.75 range during the next week. Forex dealers said that the market may witness fresh dollar supplies from foreign investments.

However, as the rupee is still overvalued against the greenback, the Reserve Bank of India (RBI) may continue with the mopping up operation through the state-run banks.

According to the dealers, the six-month premium is expected to remain in the range of 6-6.25 per cent, while the one-year premium may remain in the 5.10-5.25 per cent range.