Rupee seen up

OUTLOOK/ Currency

The spot rupee is likely to rule in the range of 45.00/25 per dollar this week. Foreign portfolio inflows are expected to continue, which would put upward pressure on the rupee.

Dollar sales by banks to raise rupee liquidity will add to the ample availability of greenbacks in the money market. Analysts say the American currency's depreciation across the globe would be in the rupee's favour.

That being the trend, exporters are braced to bring back their receivables, which would also add to the firmness in the rupee-dollar exchange rate. However, there will be demand for the local currency from importers, both for oil payments and for general imports.

Premiums may slip

Forward premiums are likely to soften this week. Fundamentally, with the hike in interest rates in the US, the differential between India and the US has reduced and this will reduce the buoyancy in premiums.

Corporates are unlikely to get dollars from the Indian market to invest overseas following a decline in the interest rates across south-east Asia.

This follows the cut in interest rates by the Bank of Korea and banks in Hong Kong last week. The demand from importers will be met by dollar supplies from exporters and foreign institutional investors.

Recap: Spot rupee breached the 45-level last week to reach 44.87 but managed to stabilise at around 45.20/25 to the dollar with RBI intervention and importer demand. Forward premiums continued to remain high due to liquidity shortage in the money market and high call rates.