The spot rupee is expected to remain in the range of 48.40 to 48.60 during the week with a downward bias. Dealers said though there can be pressure on the currency owing to importers' demand for the greenback, the Reserve Bank of India may supply dollars to reduce the pace of weakening.
A dealer with a foreign bank said: "Exports are not growing impressively and, hence, we do not expect good dollar supply. However, there could be pressure from importers. Moreover, the rupee is also overvalued and hence it is slated to fall."
Dealers, however, said the sharp fall in the currency may generate speculative pressure and this concern may prompt the apex bank to pump dollars into the market.
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In the forward premium markets , the falling yields of government paper will reduce the forward premium rates as well. Forex dealers are expecting the six-month annualised premium to remain in the range of 5.50 per cent to 5.75 per cent and the one-year premium in the range of 5.25 per cent t0 5.50 per cent during the week.
The forex head of a private bank said: "Government paper yields are likely to dip further during the week. But on the other hand, US interest rates have been increasing and is likely to increase further during the week as the economy has shown early signs of revival. This will keep the forward premiums softish during the week." Dealers, however, are expecting an auction of government paper, which will check the fall in gilt yields and the dip in premium rates as well.
The rupee closed at a new at 48.5275/5350 on Friday. It had opened at 48.51/52 and remained steady around that level. The six-month annualised premium closed at 5.63 per cent compared to Thursday's close of 5.70 per cent. The one-year premiums fell to 5.45 per cent from Thursday's close of 5.49 per cent.