Dealers foresee subdued trading unless there is an inflow of GDR funds this week. They, however, added that if the State Bank of India continued to buy dollars, there would probably be a further decline in the rupee rates against the dollar.
Forward premiums on the dollar are also expected to ease and quote between 8 per cent and 9 per cent. Citing the reason behind this, dealers said the supply of dollars was adequate and thus, the demand for the same could be met.
The dollar was quoting in the region of Rs 35.65 to Rs 35.73 for the better part of last week, but there was a sharp rise in dollar rates on Friday, when it touched Rs 35.86. The greenback had resumed the week between Rs 35.68 and Rs 35.71 and hovered around this figure till Thursday. On Friday, however, there was a sharp decline in the rupee due to sustained dollar purchases by the State Bank of India (SBI). The trend had actually started on Thursday when the SBI had bought between $30 million and $40 million.
The market, being thin, this small buy was translated into a fairly large movement, with the dollar touching Rs 35.71.
On Friday too, the SBI kept up the tempo of dollar purchases, and this pulled down the rupee to Rs 35.86. However, a large dollar sell-off followed, which bolstered the Indian currency to 35.81-35.82. The SBI's departure later further propped up the rupee, which gained a good 14 paise to close at 35. 72.
Forward dollar premium was at 10.4 per cent, annualised on Thursday and Friday. The corresponding figure was 11 per cent at the beginning of the week. The rates are expected to ease further next week.