Spot Stays Static, Premiums Inch Up

FOREX REPORT

The spot rupee remained inert, opening and closing at 43.9725. The forwards moved up a bit, in anticipation of liquidity tightening in the market owing to the rise in call rates.

"Through the day, the spot (rupee) traded within the range of 43.9700 to 43.9750, moving within an extremely tight range of half a paisa," said a dealer with a private-sector bank. "The State Bank of India (SBI), it seems wanted to test the demand for dollars in the market and bid the dollar higher in the morning, but got it under control immediately," he said.

The volume dealt with was moderate, despite there being some activity in the morning by the SBI. "It was a very stable and dull day in the spot rupee market with the activity ranging between half and 1 paisa," said a dealer.

 

Today, the spot rupee is expected to be range bound between 43.97 and 43.99. "It purely depends on the SBI, whether it chooses to to sell or turn into a buyer. If it does, then we may see the rupee inching towards the 44 mark, but other wise it will very comfortably remain in this narrow range," said a broker with a private-sector bank. One dealer very categorically stated that "there will not be much of a difference unless the BSI wants to."

The forwards moved up slightly, aggregating in a 2 to 3 APIs move, yesterday. "The market was bid little and closed higher than Friday's close.

"All dips are being paid, because the liquidity is perceived to be tighter and the markets are expecting the announcement of another auction, hence the premium closed higher," said a dealer with a private sector bank.

Another point of view came from a dealer with a foreign bank, who said, "The rise could be a result of the inflation data coming in on Sunday evening. Part of the reason for the movement in the forwards could be this data."