The spot rupee traded in a close range of 48.02 to 48.08 on Thursday as against Wednesday's 48.035 - 48.12 range. Forward premiums went down on the back of softer call money rate and a stable forex market.
The spot rupee opened in the range of 48.07/08 in the morning, but gradually strengthened during the day to touch an intra-day high of 48.02. The unit, however, weakened a bit in the afternoon to close at 48.03/04.
A dealer with a private bank said: "There was no demand pressure in the market. Moreover, the exporters have started bringing back their proceeds from abroad. These factors helped the rupee to strengthen against the greenback."
A dealer with a foreign bank said: "The fear over a major hike in oil price isn't there any more and this has eased the situation."
The forward premiums softened by 10-25 basis points along with the strengthening of the rupee. The six-month premium closed at 6.18 per cent as against yesterday's closing of 6.28 per cent and the one-year premium closed at 5.98 per cent as against Wednesday's close of 6.23 per cent.
The rupee is likely to remain stable and is expected be traded in the range of 48 to 48.10 tomorrow with more export proceeds entering the country and little demand for import covering. A dealer with a private sector bank said, "the demand for import covering that arose after the September 11 crisis has been exhausted. Moreover, with forex market turned stable exporters have started bringing back their proceeds. These will help the rupee strengthen." Dealers, however, do not expect the rupee to strengthen more than 48 on the back of a poor trade balance.
Forward premiums are likely go down further as the call money rates may remain low and hover around the benchmark bank rate. Dealers expect the six-month premium to come below 6.15 per cent, while the one-year premium to close around 590 per cent on Friday. A forex dealer said, "the liquidity condition is good, call money rate is soft and the spot rupee is on a recovery trail. With these factors in the background, premiums should continue to soften."
