Omo Auction Nudges Forwards Up, Spot Slips

The spot rupee was traded in a narrow range of 47.13-47.1425 Thursday against Wednesday's 47.1150-47.1350 range. The trade volume, however, continued to remain low. Forward premiums nudged slightly up on the back marginal tightening of liquidity on the eve of Rs 6,000 crore of OMO (open market operations) auction.

The spot rupee opened around 47.13 in the morning. The Indian currency, however, weakened a bit from that level and touched the 47.1425-mark during the day. However, it strengthened at the dying hours to close at 47.1350.

Dealers said that it was the public sector banks who were buying dollars while the foreign banks were unloading it.

 

A dealer with a foreign bank said, "There was not much trading in the spot market and the rupee remained in a narrow range. It is very difficult to find a logic behind that."

The Reserve Bank of India (RBI) reference rate for the dollar stands at 47.14 today against 47.13 yesterday.

Forward premiums have come up a bit today. The benchmark six-month premium closed at 4.55 per cent as compared to 4.50 per cent yesterday while the one-year premium closed at 4.70 per cent against 4.65 per cent yesterday.

A dealer with a foreign bank said, "There will be marginal tightening of liquidity tomorrow on the back of Rs 6,000 crore of open market outflow. Moreover, the fall in forward premiums over the last two days were also quite sharp. Today's rise the rates is a corrective movement to some extent."

Spot rupee is likely to remain range-bound around 47.11-47.14 tomorrow. A dealer said, "The condition in the forex market is not likely to change in the near future as there is no positive or negative force being foreseen for now."

Dealers are expecting forward premiums to remain grooved at the current levels.

The treasury head of a private sector bank said, "Call rates are likely to remain soft and stable around the current level and forward premiums will be track it."