Re Rangebound, Forwards Edge Up

FOREX REPORT

The spot rupee remained rangebound yesterday to end at 43.9775, marginally lower than Wednesday's closing level. The forward premiums closed higher due to expectation that the call rates will rise in the coming fortnight.

The spot rupee remained unchanged owing to weekend considerations. "It was a stable but dull day in the market with continuous dollar selling by the State Bank of India (SBI), sustaining the existing demand," said a dealer with a foreign bank.

"The traded volume was reasonable yesterday and the corporate demand was sufficient. But with SBI selling, the spot rupee did not move in any direction," said a dealer with a foreign bank.

 

The rupee is expected to be range-bound, save Reserve Bank of India's (RBI) intentions to do otherwise. The market saw dollar demand in abundance but there were enough supplies to explain the lack of movement in the spot rupee. The general consensus seems to be that unless the RBI wants the rupee to depreciate, it will continue to exert a tight reign over the market in the weeks to come.

Most dealers accept that unless the RBI sees fit to remove this intervention, the rupee will rule in a tight range. The inherent demand still exists but unless the disguised intervention is done away with, the rupee will not move in either direction.

The forwards saw little movement in anticipation of the call rates fluctuating for the fortnight starting today. The forwards closed higher than Wednesday's close.

"The nationalised banks were receiving throughout the day but the movements in the forwards market took place only towards the end of trading," said a dealer with a private sector bank. The one-year forwards closed three-paise differential and the six-month, 1 paise in comparison to Wednesday's close.