Lax $ Demand Props Re, Forwards Stay Static

The rupee was traded in a close range of 48.035 to 48.12 versus the dollar today against yesterday's 48.11 to 48.17. Forward premiums were almost static following stability in the forex and call markets.

The spot opened weak around 48.11/12 in the morning, but gradually strengthened during the day to close at 48.035/045 against yesterday's closing of 48.11/12.

A dealer with a private bank said, "There was no demand pressure in the market. Moreover, one corporate ploughed back $40 million export proceeds into the country today. Both the factors helped the rupee to recover against the greenback."

A dealer with a foreign bank said, "As the central bank has reiterated its commitment over meeting temporary demand-supply gap in the forex market, the concern over the war did not put major pressure on the currency."

 

Forward premiums ended the day almost unchanged. According to the dealers, premiums opened little lower in the morning, but came up a bit to close at yesterday's level. The six-month premium closed at 6.28 per cent and the one-year premium at 6.23 per cent.

The rupee is likely to remain stable and traded in the 48 to 48.10 range tomorrow as dealers do not expect any major demand pull. Said a dealer with a private bank, "The sentiment has improved a lot and corporates are also expected bring overseas dollar holdings into the domestic market. With little import pressure and oil prices remaining unchanged, this will certainly improve the Indian unit against the dollar."

Forward premiums are likely to soften a bit as call rates are likely to remain low around the benchmark bank rate. Dealers are expecting the 6-month premium to come below 6.25 per cent, while the one-year premium to close around 6.20 per cent tomorrow. A forex dealer said, "the liquidity condition is good, call money rate is low and the spot rupee has been recovering. So we expect the premiums to go down over the next two days of the week."