The spot rupee closed slightly weaker against the dollar today at 48.2575/2650 compared with Friday's closing of 48.24/25. Forward premiums eased marginally as the government paper yields dipped on the expectation of reduction in the interest rate on employees' provident fund.
The rupee opened at 48.2250/2450. Most of the deals were done in the range of 48.2450-48.2550.
However, the currency slipped in the afternoon to close at 48.2575/2650. Forex dealers said that there was not enough dollar supply in the market and in the afternoon there was bit of corporate demand. Public sector banks were the main dollar buyers today.
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In the forward premiums market, the six-month annualised premium closed at 5.97 per cent against Friday's closing of 5.99 per cent. The one-year premium dipped to 5.77 per cent from the Friday's closing of 5.80 per cent.
A dealer with a foreign bank said, "It was mainly the fall in government paper yields that helped the premiums to soften. The possibility of United States interest rates going up was the secondary factor." Forward premiums depend upon the interest rate differential between the US and Indian market.
The rupee is likely to remain in the 48.20-48.30 band against the greenback tomorrow. A forex dealer with a new private sector bank said, "no major supply or demand pressure is expected on the external trade front." He mentioned that the Indian currency is slightly overvalued against the dollar and this can prompt the Reserve Bank of India (RBI) to mop up dollars from the market through the state-run banks.
Forward premiums are expected to remain range-bound with a downward bias as the government paper yields are likely to go down further. Forex dealers said that the six-month annualised premium is expected to hover in the 5.90-6.00 per cent band. The one-year premium is expected to be in the 5.80-5.90 per cent range.