Psbs Dollar Sapping Curbs Re, Premiums Slip

The spot rupee hovered in a tight range of 48.69-48.72 today amid dollar buying by the public sector banks. Forward premiums dipped tracking the southward movement of government paper yield.

The Indian currency opened at 48.71/72. It strengthened to 48.69 levels as there was dollar selling pressure. However, after the state-run banks started buying at the 48.70 levels, the Indian unit weakened against the greenback and the rupee closed at 48.7000/7050.

A dealer with a new private sector bank said, "it was the same old story in the forex market. There was dollar supply in the market, but the nationalised banks sapped dollars from the market. The Indian currency could appreciate to the 48.65 levels in absence of the Reserve Bank of India (RBI) intervention."

 

In the forward premium market, the six-month annualised premium closed at 5.86 levels compared with the previous close of 5.95 per cent. The one-year premium closed at 5.20 per cent against its Friday close of 5.45 per cent.

A dealer with a foreign bank said, "With US interest rates remaining more or less steady, it is the government paper yields which have been dictating the forward premium rates. After the Budget announcement, the premium rates soared high as the government security yields rose. As the latter came down today, the premiums dipped today."

The spot rupee is likely to remain in the 48.65-48.75 range tomorrow. Dealers said that there can be good supply of dollars from institutional investors, but there will be demand from the state-run banks to neutralise the supply. In the forward premium market, rates are likely to dip as further dip in the government paper yield is expected. The six-month annualised premium is likely to remain in the range of 5.75-5.80 per cent, while the one-year premium should rule in between 5.15-5.20 per cent.