The spot rupee closed marginally stronger at 47.98/48.02 against the US dollar today as compared with yesterday's closing of 48.02/03. Traded volumes remaining very low. Forward premiums surged once again in line with the rise in call money rates.
The spot rupee opened weak at 48.02/05 in the morning, but strengthened gradually during the day. Dealers said most deals were done in the 47.95- 48.01 range.
Said a dealer with a foreign bank: "There was pressure on the Indian currency from importers. But, the situation has improved considerably over the past few days."
Dealers said there was not much supply of dollars from the state-run banks.
The treasury head of a private sector bank said: "The rupee ended stronger as the demand for dollars has come down. The nationalised banks did not have to intervene today to keep the local currency steady."
Forward premiums went up sharply as call money rates hardened. The 6-month premium went up sharply by 145 basis points to touch 6.95 per cent as compared with yesterday's closing of 5.5 per cent, while the one-year premium went up by 138 basis points to close at seven per cent as compared to yesterday's closing of 5.62 per cent.
Said a dealer with a nationalised bank: "Forward premiums were very volatile today though the rupee was comparatively stable. It was the sharp rise in the overnight rate that pushed up premiums."
The forex market is likely to remain stable tomorrow. The treasury head of a private sector bank said: "The situation is much improved now as everybody expects the state-run banks will help if the rupee weakens too much." Dealers also mentioned that demand from importers is likely to go down further and ease pressure on the rupee. The Indian currency is likely to trade in the range of 47.95 to 48.05 against the dollar tomorrow.
Dealers, however, were not sure how the premiums will move. Said a forex dealer: "Of late, there has been significant volatility in the call money market and, as the premiums are very much dependent on call rates, it is difficult to predict their movement."
