The spot rupee is expected to keep a broad range of 47.12 to 47.20 this week due to slack demand. Forward premiums should edge up as dealers believe that they have bottomed out at the current levels.
The local currency should see some stability as the month-end demand for dollars is finished. "The spot rupee is seeing support at 46.10 against the US dollar and should remain grooved between 47.10 and 47.15 for the week," said a dealer with a new private sector bank.
On Friday, the spot rupee kept a narrow range of 47.13-47.15. Importer demand was overshadowed by large dollar inflows from the US due to bunching of supplies on account of the US holiday (American independence day) of July 4th. The Reserve Bank of India (RBI)'s reference rate for the dollar was 47.15 on Friday.
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"The rupee is likely to stabilise as the last few weeks had seen the local unit depreciate by some paise. But, the spot has not slipped enough to call for a correction as per the real effective exchange rate (REER)," said a dealer with a new private sector bank.
Forward premiums should see some gains this week, as dealers believe premiums are bottoming out at their current levels. The 6-month (annualised) premium should keep a range of 4.50 per cent to 4.80 per cent. On Friday, the 6-month (annualised) closed the day at 4.56 per cent, while the one-year (annualised) closed at 4.61 per cent.
"The 6-month (annualised) should keep a range of 4.50 per cent and 4.80 per cent, while the one-year (annualised) should stay in a similar band as the current curve is flattish," said a foreign exchange dealer.
"The coming week should see premiums rise if the much-awaited domestic rate cut comes through. Though the central bank has indicated that the cut will come later than sooner, the market still keeps anticipating a cut to prop up the premiums," said a dealer with a foreign bank.