Forex inflows gusher presaged

CURRENCY

The market is confident of forex inflows this week. "Foreign portfolio investments in Indian equities is not the only source of foreign exchange inflows .

The proceeds of external commercial borrowings and depository receipts raised by Indian companies and banks being brought into India are another significant source," said a foreign exchange dealer.

In a manner of speaking, this is an interesting trend "" forex inflows this week are not wholly dependent on the interest-rate sensitive portfolio investments.

Meanwhile, the spot rupee is expected to rule in the range of 43. 65-80. The upside will be checked by the Reserve Bank of India, which is likely to intervene to prevent sharp appreciation.

Wind down time for premiums

Forward dollar premiums may ease with gradual waning of month-end pressures.

Dealers said that with the beginning of the new financial year, banks will also take up positions based on a long-term view of the rupee. As a result, there could be premium receiving in the market.

This means most of the banks are likely to buy rupee and receive a premium instead of paying one. This follows a bullish outlook on the rupee in the medium to long term, said a dealer.

However, there are some contrarian views too. Some dealers are of the view that if the US continues to hike interest rates and rates in India remain flat for relatively long time, then the interest rate sensitive flows may ease. This might impact the rupee, they said.

Recap: The premium on the forward dollar inched up last week due to pressure from corporates rushing to cover their month-end payments. Rising crude prices also made oil companies take positions.