The spot rupee recovered to close at 48.24/25 today against Friday's closing of 48.27/28. Forward premiums eased following the dip in yields in the government security market.
The rupee opened lower at 48.20/21 and strengthened to touch the day's high of 48.17/18. The currency declined later due to month-end demand to close at 48.24/25.
A dealer with a private sector bank said: "There was little tension related to the border situation today. However, it was the month-end demand from corporates that kept the rupee weak."
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Dealers said trading was thin as all foreign banks were absent in the market on the last day of the accounting year. Forward premiums dipped further tracking government security yields. The six-month annualised premium fell to 6.29 per from Friday's closing of 6.65 per cent. The one-year premium ended at 6.10 per cent down from the previous close of 6.4 per cent.
The treasury head at a private sector bank said: "As the border tension reduced considerably and interest rates eased in government papers, forward premiums slipped."
The rupee is likely to hover around 48.15-48.25 tomorrow as dealers are expecting supplies through remittances to improve once again.
Forward premiums are expected to go down. According to forex dealers, the six-month annualised premium should be in the 6.25-6.35 per cent band tomorrow, while the one-year premiums may rule in the 6.40-6.50 per cent band.
The treasury head at a private sector bank said: "As long as the border tension is there, the rupee will remain weak against the greenback. But we hope the Reserve Bank of India to intervene tomorrow through public sector banks if the rupee breaches the 48.20-mark."