'See rupee trading in the range of 72.50 to 74.50 in the short term'

Receiving longer tenor, therefore, looks a good proposition considering the steepness of the curve. Near-end is likely to remain anchored on account of abundant Rupee liquidity in the banking system

The nationalised banks have been relentlessly paying forwards on behalf of the Reserve Bank of India (RBI). On its part, the RBI has been buying US dollar (USD) in the spot market and sterilising the liquidity infused as a result by swapping the USD forward, i.e. doing a Sell-Buy Swap.

Nationalised banks have also been receiving the near-end of the forward curve for their own asset liability management (ALM) purposes. Receiving in the near-term and paying in the far has resulted in the curve becoming very steep. While the 3-month premium has gone up from 3.6% to 3.90% over the