The spot rupee moved in a very narrow 48.29-48.31 range against the dollar today with little inflow and outflow of dollars. Forward premiums went up by 5-7 basis points across all maturities.
The rupee opened at 48.2900/2950 against the greenback. It slipped slightly to touch the day's low of 48.3050/3100. The currency, however, recovered a bit later to close at 48.2950/3000.
Said a dealer with a private sector bank, "There was not much trading in the forex market today. In the morning, there was a bit of corporate demand, later compensated by supplies from the exporters."
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The Reserve Bank of India's (RBI) reference rate for the dollar was 48.31 today -- same as yesterday's.
Forward premiums shone today after a sharp fall yesterday. The six-month annualised premiums closed at 6.07 per cent as against yesterday's close of six per cent. The one-year premium increased to 5.92 per cent from 5.88 per cent yesterday.
A dealer with a foreign bank said, "the premiums overreacted to the RBI deputy governor's comments. As the fall in the government security prices stopped today, the premium rates went up from yesterday's low levels."
The Indian unit is likely to remain stable in the 48.27-48.33 range tomorrow. Said a forex dealer with a new private sector bank, "The rupee is likely to remain stable against the dollar for the time being. But in a fortnight's time it should start falling as the RBI will certainly start mopping up dollars from the market to boost exports." He added that the Indian currency is slightly overvalued and the RBI should try for correction.
Forward premiums are expected to remain range-bound. According to the forex dealers, the six-month annualised premium should be in a range of 6.05-6.10 per cent, while the one-year premium is expected to hover in the 5.92-5.97 per cent band.