The spot rupee closed at a new low of 48.27/28 today after touching 48.34/35 in the morning. Forward premiums, however, dipped marginally from yesterday's levels as the yields of government paper eased a bit.
The Indian currency opened lower at 48.25/27 and fell sharply to 48.34/35 within the first hours trading. The currency however, received support from the public sector banks once it crossed the 48.30 mark and ultimately closed at 48.27/28.
Said a dealer with a private sector bank: "Border tensions brought down the rupee in the morning.
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However, as expected, the Reserve Bank of India (RBI) intervened through the public sector banks and the currency recovered." Dealers said exporters were seen to supply dollars at the 48.34/35 levels and importers were buying at the 48.25/26 levels.
Forward premiums went down further tracking the government security yield. The six-month premiums closed at 6.65 per cent against yesterday's close of 6.75 per cent. The one-year premium closed at 6.40 per cent down from yesterday's close of 6.43 per cent.
The treasury head of a private sector bank said: "Two factors worked behind the softening of the premiums. First, the government paper yields came down and secondly, the liquidity condition is expected to ease from tomorrow with another Rs 2,000 crore inflow hitting the system through cut in the cash reserve requirement."
The rupee is likely to hover in the 48.15-48.30 range during the coming week. Forward premiums are expected to remain stable with a downward bias as the liquidity will ease. According to the forex dealers, six-month annualised premiums should be in a range of 6.60 per cent to 6.70 per cent during the week. One-year premiums are likely to hover in the 6.40 -6.50 per cent range.
The treasury head of a private sector bank said: "As long as tension in the border continues, the rupee will remain weak against the greenback. But we hope the RBI to intervene tomorrow through the public sector banks if the rupee breaches the 48.20 mark."