The spot rupee closed at yet another low of 47.42/4250 against dollar today against yesterday close of 47.3450/3550. The Indian currency, earlier during the day, fell to an all time intra-day low of 47.48. Forward premiums fell by 8-10 basis points on the back of easy liquidity.
The spot rupee opened weak around 47.35/36 level in the morning and weakened later to touch 47.4800 during the day. A dealer with a private sector bank said, "It was speculative movement that pushed down the rupee today and the Indian currency continued to fall till the time the nationalised banks came to support the rupee." According to the dealers, nationalised banks were supplying on behalf of the Reserve Bank of India (RBI).
A dealer with a foreign bank, however, said, "Along with the speculative movement there was a bit of genuine import demand as well." Dealers said that most of the trades were done in the range of 47.42-47.45.
Forward premiums which have been appreciating during the last couple of days fell heavily today as the money market condition eased down. The 6-month premium went down by nine basis points to close at 4.66 per cent as against yesterday close of 4.75 per cent while the one-year premium fell by 10 basis points to close at 4.80 per cent against 4.90 per cent yesterday.
A dealer with a nationalised bank explained, "Market expected the RBI to mop up liquidity from the market on the back of a weak rupee. But it did not happen and the interest rates in the money market fell today. As a reflection to that the premiums also eased."
The rupee is likely to return to stability tomorrow. "From today's experience it seems that the public sector bank will support the rupee if it tends to fall sharply and hence we expect the Indian currency to become stable," said a dealer with a foreign bank.
Forward premiums are likely to go down further on the back of easy liquidity and soft call rates. Dealers are expecting the six-month premium to touch 4.62 per cent while the 12-month premium to 4.75 per cent.
