The spot rupee is expected to hover in the range of 48.20 to 48.30 against the US dollar this week. Forex dealers expect there will be good inflows of the greenback on account of export remittances from abroad and portfolio investments. But the Reserve Bank of India (RBI) may mop up dollars to stem the rise of the rupee against the dollar and protect exporter interests.
Said a dealer with a foreign bank: "The rupee has recovered by 16 paise during the last week -- after hitting a new low on January 11 -- as public sector banks did not buy dollars from the market. But as the rupee has appreciated quite a bit, we expect the public sector banks to buy the greenback once again."
In the forward premiums markets, rates are likely to remain range-bound with a southward bias. Dealers presage the six-month annualised premium to remain in the range of 5.95 per cent to 6.15 per cent, and the one-year premium in the range of 5.80 per cent to 5.90 per cent.
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Said the forex head of a private sector bank: "There could be a slight fall in government paper yields during the week. Moreover, US interest rates have also gone up a bit off late. As this indicates the narrowing down of the interest rate differential in the Indian and US markets, premiums are likely to fall slightly during the week."
The spot rupee closed at 48.24/25 on Friday. The Indian unit opened at 48.30/31 in the morning and went up to touch the day's low of 48.3050/3150. The currency, however, strengthened later during the day to close at 48.24/25.
Premiums recovered by seven to 12 basis points across the maturity, following a fall in government paper yields. The six-month annualised premium closed at 5.99 per cent as compared with Thursday's closing of 6.07 per cent. The one-year premium dipped by 12 basis points to 5.80 per cent.