Forwards Still Firm, Spot In A Slot

FOREX REPORT

Forwards continue to remain tight as call rates remain high even as the spot rupee remains rangebound. The spot rupee closed at 43.61 as compared to 43.60 on Wednesday.

Call money rates closed at 25 per cent yesterday thus leading to forward premia remaining tight. Foreign banks were again the main players in the forward market driving up the forwards by conducting sell-buy swaps. "Once again the forward market moved just one way with demand for dollars exceeding supply," said a dealer with a private bank.

Over the past few days foreign banks and private banks have been driving up forward premiums to stay liquid in a tight call market. Export sales which would have been in evidence by now have not succeeded in keeping forward premia down.

 

Far forwards moved up by five paise in the longer maturities with January moving from 116 to 121 paise. December moved up from 106 paise to 110 paise.

Cash-tom and tom-spot also continued to strengthen. Cash spot moved up from 6.75 paise to 8.50, while tom-spot moved up from 5 to 6 paise during the day's trade.

In the spot market the rupee was traded in a very narrow intraday range of 43.61 to 43.62. "There was some selling of dollars towards the close but the demand was adequate in the market so the rupee did not move at all," said a dealer.

According to dealers the spot rupee will remain range bound for the day tomorrow. However forwards will remain tight as call rates continue to stay high.

In the international market the yen continues to weaken against the dollar. It was traded at 110.35 yen to the dollar at the time of the close of the Indian market. The euro strengthened slightly and was traded at 0.9928 dollars while the pound was stronger at 1.6108.

The closing levels of annualised premiums were 1 month -4.8 per cent (4.01 per cent on Wednesday); 3 months -3.54 per cent(3.31 per cent); 6 months -3.09 per cent (2.93 per cent); 9 months -2.98 per cent (2.86 per cent); 12 months -2.92 per cent (2.84 per cent).

Cash-tom and tom-spot closed at 1.00-2.50 and 5-6, while cash-spot closed at 6-8.5.

Premiums in paise closed at February - 8-10 (7.5-8.5 on Wednesday) March - 20.5-21.5 (18-19.5); April -30-31.5 ( 28-30); May -40-41.5 (38-40); June -49-51 (48-49); July -59-61 (57.5-59); August -69-71 (66.5-68); September -79-81 (76.5-78); October -89-91 (86-88); November -99-101 (96-98); December-109-111 (106-108) ; January - 119-121 (116-118).

The rupee closed against the Euro at Rs 43.25, against the pound at Rs 70.24 and against 100 Japanese yen at 39.51.