$ Forward Premia Dips To 8.6%

The rates which closed on Tuesday at 8.8 per cent dropped by a significant 60 basis points to touch 8.6 per cent. With the expected cut in CRR, rupee interest rates were predicted to fall. Since forward rates are nothing but the differential between the dollar and rupee interest rates, the premia fell.

The spot rupee also hardened against the dollar as there was a selling pressure in the market. The spot dollar opened at Rs 35.63/65 levels yesterday. The sale of dollars began as soon as the market opened yesterday with State Bank of India taking the lead. This resulted in the rupee hardening to 35.58/60 per dollar. The greenback closed at 35.60.

 

Forward premia on the dollar dropped yesterday with monthly premia levels having fallen by more than 12 paise as compared to levels on Tuesday.