Spot Rangebound, Premiums Slipped

The spot rupee closed little changed against the dollar at 48.9150/9200 today amid low trading as against yesterday's closing of 48.91/92. In the forward premiums market, the downturn in the rates continued.

The Indian currency today opened at 48.94/95 against the greenback and strengthened slightly. According to the dealers, exporters sold dollars yesterday expecting the rupee to appreciate.

However, the same inflow was missing today. Forex dealers felt that these exporters today might be waiting whether the central bank would intervene through state-run banks to stop the rupee's gain against the greenback. However, there was no large scale buying of dollars by the public sector banks today.

 

The easy liquidity condition, dip in the government paper yields and positive outlook on the rupee helped the premium rates to dip further today. The six-month annualised premium rate closed at 5.45 per cent as against 5.54 per cent yesterday. The one-year premium fell by nine basis points to close at 5.40 per cent.

In the spot rupee market, the sentiment will remain positive. Dealers are expecting the rupee to appreciate by three to five paise tomorrow if the central bank does not intervene. As the sentiment is expected to remain positive and the liquidity will remain in excess supply, it is likely that the premium rates will fall further. Dealers view that the six-month annualised premium is likely to hover in a band of 5.38-5.43 per cent. The one-year premium is expected to be around 5.33-5.37 per cent.