Psb Dollar Mop-Up Move Stanches Spot Surge

Spot rupee ended steady today at 48.25/26 per dollar compared with Wednesday's close of 48.2475/2575. Forward premiums eased a notch, driven down mainly by easy liquidity in the inter-bank call money mart.

Bunched up dollar supplies saw the Indian unit appreciate in early morning trades but dollar mopping by a public sector bank (PSB) prevented it from appreciating further.

The local currency touched a low of 48.2650 and a high of 48.2350 during the course of the day. The reopening of the New York markets after the New Year holidays resulted in generous dollar supplies into the forex arena.

Also, there was some selling by banks offering custodial services to foreign funds. Forex dealers pointed out that there was little demand for the greenback and for most part of the trading session today, the rupee was ranged between 48.23 and 48.2650 to a dollar.

 

"The rupee is continuing its recovery. It opened marginally higher against the US dollar in response to sustained dollar selling in the inter-bank foreign exchange market," said a forex dealer with a foreign bank.

A large state-run bank bought dollars, presumably on behalf of the Reserve Bank of India (RBI), which may want to prevent an appreciation in the rupee's value to protect India's export competitiveness.

Dealers said healthy inflows are expected in the coming weeks, particularly from foreign funds, which normally make their allocations for investments around this time of the year.

They pointed out that the exporters were coming in and selling dollars at the current levels while the importers were holding back purchases in views of the tension on the Indo-Pak border.

The one-year forward premium wound up at 5.99 percent, compared with Wednesday's close of 6.01. Spot rupee is expected to appreciate tomorrow if the central bank does not intervene through state-run banks. Forward premiums have more or less bottomed out and will stay at the current levels.