Rupee could slip

OUTLOOK: Currency

The spot rupee movement will be guided by the euro-dollar trends. The US trade deficit, which figured at $56.8 billion as against market expectation of $58 billion, has boosted the dollar (1.2203 euros per dollar against 1.2191 earlier).

"If this trend continues, there will be pressure on the rupee to depreciate. The only supplies in the pipeline are the portfolio investments in the equity market.

Companies which were expected to bring in their dollar proceeds have not done so, anticipating a depreciation in the rupee. In this backdrop, the spot rupee will move in a wide band of 43.50-70 per dollar this week.

Forward premiums ranged

Forward premiums are expected to remain rangebound this week. In case of volatile movements in dollar-rupee exchange rate, the premiums are likely to track the movement in the spot rupee.

Dealers said even if there is an increase in demand for dollars, it will be matched by supplies.

Fundamentally, there is less upward pressure on forward premiums after the narrowing of the gap between the Indian and US rates.

On the other hand, if oil prices become too volatile, there could be a rush for forward dollars, which could push up the forward premiums.

Recap: The rupee-dollar exchange rate remained stable throughout the last week as greenback supplies perfectly matched demand.

But forward premiums ruled higher due to increased dollar demand from importers who wanted to hedge their positions.