Spot rupee closed today at 48.27/28, almost unchanged from yesterday's close of 48.2850/2950. Forward premiums, however, fell sharply reacting to the statements made by Reserve Bank of India (RBI) deputy governor Y V Reddy.
The Indian currency opened at 48.28/29 against the dollar. It fell to touch the day's low of 48.31/3150. The rupee, however, strengthened against the dollar later on. A dealer with a private sector bank said: "There was some pressure from the importers earlier in the day that made the rupee fall a bit. It, however, recovered later as the some of the exporters unwound their long positions."
Dealers said commercial banks across all categories sold dollars today. A dealer with a private sector bank said: "Public sector banks who bought dollars heavily from the market last week were also selling today. This helped the rupee strengthen a bit after an initial dip."
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Forward premiums fell by 10-20 basis points across maturities following Reddy's statement. The six-month annualised premiums closed at six per cent per cent today as against yesterday's close of 6.20 per cent. The one-year premium dipped to 5.88 per cent from six per cent.
The treasury head of a private sector bank said: "Premiums could not react to Reddy's statement in Chennai yesterday, because by the time the news was available to us, the market was closed. Reddy reiterated the same in Kolkata today and the market reacted to the statements."
The rupee is likely to gain against the dollar tomorrow. A forex dealer said: "We expect more inflow on account of foreign institutional investment and export proceeds. But lot will depend upon how the public sector banks behave in the market." Forward premiums are expected to remain range-bound. Forex dealers are expecting the six-month annualised premium to be in the range of 6 per cent to 6.05 per cent and the one-year premium in the range of 5.85 per cent to 5.95 per cent. Dealers said Reddy's statement has already had its impact, and so no further fall in the premium rate is expected.