The spot rupee weakened by four paise today following dollar-buying by the public-sector banks (PSBs) and closed at 49.010/015 against the greenback amid thin trades. Forward premiums remained unchanged during the day, and closed slightly lower than yesterday's level.
The Indian currency opened at 48.9850/9950. There was no major supply of, or demand for, dollars in the market. However, there was a bit of buying from the public sector banks which forex dealers suspected was on behalf of the Reserve Bank of India (RBI).
A dealer with a private sector bank said: "As the possibility of war has receded considerably, there was no pressure on the rupee. However, it seemed that the RBI felt the currency is slightly overvalued and hence bought dollars from the market through the public sector banks."
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In the forward premiums market, the six-month annualised premium closed at 5.71 per cent, as against 5.73 per cent yesterday. The 12-month premium also closed two basis points lower at 5.47 per cent today as against its previous close of 5.49 per cent. Dealers said two counteracting factors kept the forward premiums steady. On the other hand, the liquidity condition was good, but government yields rose on profit-booking.
The spot rupee is likely to remain in a thin range and hover in a range of 48.97 to 49.03 tomorrow. A dealer with a foreign bank said: "We expect the spot rupee market to remain stable.
The Indian currency will move in accordance with the RBI's activity in the market." The forward premiums are likely to remain biased with a downward bias on the back of comfortable liquidity condition. According to the forex dealers, the six-month annualised premium is expected to remain in the range of 5.68 per cent to 5.73 per cent while the one-year premium is likely hover in the band of 5.40 per cent to 5.45 per cent.