Spot Re Yo-Yos, Premiums Tighten

FOREX REPORT

The spot rupee weakened yesterday following inflows of corporate demand into the market. However, it recovered later in the day to close at 43.62 as compared to 43.63 on Friday.

The swaps market remained range-bound, but dealers expect it to tighten in the following days.

The spot traded in an intra-day range of 43.62 to 43.64. As the market opened in the morning, dealers said that a large amount of corporate demand entered into the market from some corporates. However, later in the day the demand tapered off and the rupee recovered to 43.62. "There is a feeling in the market that the rupee could tighten and so there are some corporates who are covering in the market," said a dealer.

 

Forward premiums tightened also as paying came in from importers looking to cover at low levels of premiums. "The current levels of 2.75 per cent are very attractive for corporates and this level has become a floor level where paying comes into the market," said a dealer. "Also call money rates have not eased and are still in tight to a certain extent, so forwards are beginning to move up," he said.

Last week, despite a tightening in call rates premiums remained range-bound with the market seeing it only as a temporary phenomenon. However, now dealers say that the call rates could continue for some time and this has caused the premiums to move up gradually.

"There is little market-moving news right now and, therefore, players are in a cautious mood," said a dealer with a private bank.

For tomorrow, the spot rupee is expected to be in a range of 43.62 to 43.65, while premiums are seen in a range of 2.75 to 3 per cent for the six month maturity.

In the international markets, the euro was traded against the dollar at 0.9862 at the time of the close of the Indian market. The pound was traded at 1.5928, while the Japanense yen was at 108.41 against the dollar.

The closing levels of annualised premiums were 1 month -3.26 per cent (3.37 per cent on Thursday); 3 months -2.97 per cent (3 per cent); 6 months -2.78 per cent (2.85 per cent); 9 months -2.76 per cent (2.82 per cent); 12 months -2.82 per cent (2.58 per cent). Cash tom and Tom-spot closed at 2-4 and 0.50-0.75, while cash spot closed at 2.5-4.75. Premiums in paise closed at February - 6.75-7.25 (7-8); March - 16.75-17.25 (17-18); April - 26.25-27.75 (27-28); May - 36-37 (37-38); June - 45.5 - 46.25 (47-48); July - 55-56 (57-58); August - 65-66 (67-68); September - 74.5-75.5 (77-78); October -84.5-85.5 (87-88); November - 95-96 (97-98); December - 104.5-105.5 (107-108); January - 115-116 (117-118). The rupee closed against the Euro at Rs 42.09, against the pound at Rs 69.72 and against 100 Japanese yen at 39.80.