The spot rupee appreciated by five paise against the dollar today following the global trend and closed at 48.91/92. The easy liquidity condition and the dip in gilts yield pushed down forward premium rates.
The spot opened at 48.96/97. However, during the day it moved up slowly against the greenback.
Dealers in the forex market said that the market participant took a view that as other currencies have been appreciating against the dollar for the past one month, the rupee must have become undervalued against the greenback and this led to the strengthening of the rupee. According to them, as the Reserve Bank of India (RBI) did not object to the rupee's rise today, it seemed that even the apex bank wants the currency to gain strength.
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In the forward premiums market, the drop in the rates were in the range of 5-12 basis points. The six-month annualised premium closed at 5.54 per cent today as against yesterday's closing of 5.63 per cent. The one-year premium ended the day at 5.49 per cent as against its previous close of 5.53 per cent.
The rupee is likely to go up further against the greenback tomorrow and may touch 48.85 if the RBI does not intervene and mop up dollars from the market through the state-run banks. A section of dealers even feel that in absence of central bank's intervention the rupee will touch 48.80 by this weekend. Forward premium rates are likely to fall further as the liquidity condition will remain comfortable. According to dealers the six-month annualised premium is likely to hover in band of 5.50-5.55 per cent while in case of one-year premium the likely range may be 5.42-5.47 per cent.