The spot rupee closed at a new low of 47. 81/82 today for the sixth consecutive day. It had closed at 47.51/52 yesterday. The Indian currency, however, recovered slightly from an intra-day low of 47.84 in the dying hours of the day. Forward premiums went up by 40-45 basis points across all maturities.
The spot rupee opened weak around the 47.57/58 level in the morning and weakened sharply during the day to touch 47.84. Dealer said that the commercial banks, irrespective of their ownership, were buying today as there was huge demand from the importers.
A dealer with a private bank said, "Unlike yesterday, state-run banks never came to rescue the currency and that's why the currency continued to fall." State Bank of India, Canara Bank and Bank of India were seen buying dollars at various levels, dealers said. However, most of the demand were from the foreign banks.
Forward premiums continued to go up as liquidity was under strain and call rates hardened. The 6-month premium closed at 5.65 per cent compared with yesterday close of 5.12 per cent while the one-year premium went up to 5.75 per cent against yesterday's 5.30 per cent.
A dealer with a nationalised bank explained, "There has been concern over a Fed rate cut and the importers were also covering their future needs. These, in addition to tight call rates, pushed up premiums."
Rupee is likely to go down further in the coming week and touch 48 if the RBI does not intervene. Said a dealer with a foreign bank, "There was no supply coming because of US situation and there is a fear of hike in the international oil prices. In a situation like this, the supply form the central bank only can help the rupee to stabilise or strengthen."
Forward premiums are also likely to go up. A forex dealer said, "The liquidity situation will be tighter from tomorrow because of advance tax outflow and everybody is expecting a Fed cut as well. If the rupee continues to go down premiums are poised to fall more."
