The spot rupee edged up against the dollar to close at 47.85/86 today, as against the previous close of 47.8550/8650, backed by dollar sales by exporters and unwinding of long positions by banks. The one-year dollar premium softened to 6 per cent compared with 6.5 per cent yesterday.
The local unit opened softer at 47.8800/8950 and dipped to a low of 47.90/91 intra-day, after banks went long on the dollar, anticipating demand from corporates and importers on account of month-end pressures.
The rupee has appreciated by around 15 paise since the onset of its rally on September 20 after depreciating by around 60 paise following the September 11 terrorists strikes in the US.
According to a dealer with a private sector bank, the rupee is unlikely to rise beyond the 48 levels as public sector banks will start buying dollars at the behest of the Reserve Bank of India to calm the foreign exchange markets.
In cross currency trades, the domestic currency staged a modest rally against the euro and also posted mild gains against the British pound sterling.
The rupee ended higher against the euro at 44.08/10 from yesterday's close of 44.17/19. It edged up further to close at 70.54/56 per pound as against the previous close of 70.61/63.
The futures market was also quite active and forward dollar premiums declined due to heavy receiving interest on the back of ample liquidity in the domestic money market.
The rupee is expected to remain stable at 47.80/85 per dollar levels tomorrow, but month-end pressures may weaken it slightly. Dealers said forward premiums could edge lower further.
