Spot Braced To Pierce 46/$ Mark

"The spot rupee continued slipping despite inflows from the Exchange Earners' Foreign Currency (EEFC) account trickling in. The dollar supplies are still falling short. This dearth led to the spot rupee touching a low of 45.95 during last week," said a dealer with a private sector bank.

The RBI-set deadline for EEFC account-holders to bring back half of their holdings abroad expired on August 23.According to dealers, the amount that has come in through this account is close $850 million and not the expected $1 billion.

Towards the weekend, the spot rupee recovered to close at 45.86 on Friday. Demand for dollars remained consistent throughout last week despite the EEFC inflows.

 

"The rupee is expected to open higher and could cross the 46-mark on Monday or Tuesday," said a dealer with a foreign bank.The urge for greenbacks is expected to be seen throughout this week.

The Reserve Bank of India's (RBI) reference rate for the rupee was 45.89 on August 25.Forwards will track spot rupee and if spot stays stable, premiums should come off by 7-9 paise across the board.

The six-month annualised premium closed at 5.36 per cent as against 5.48 per cent previously. It is expected to remain around 4.90-5.30 per cent.

Importers are advised to cover their near-forward contracts and should book on any dip in the rupee. "45.80 would be a good level for importers to buy but we don't think the rupee will appreciate to that level," said a dealer with a private sector bank.

Exporters are asked to wait and watch the rupee movements. "It would be ideal if the rupee crosses the 46-mark, especially if it touches the 45.10-45.20-mark," said a dealer with a foreign bank.

"Premiums on near-term forwards should come off by 5-7 paise, while far-forwards should ease by 10-15 paise if the rupee stays stable to firm," he added.