Re Down A Tad, Premiums Follow Suit

FOREX REPORT

The spot rupee had a dull day with it closing half a paisa lower than Monday's levels, at 43.9700. Dealers said there seemed to be a lot of disguised intervention as most nationalised banks were continuously selling to meet the corporate demand in the market.

The forwards dipped slightly, in anticipation of the hike in the interest rates by US Federal Reserve.

"The spot rupee opened to a quiet morning and stayed in that manner for nearly the whole day drifting to 43.9750. In the late afternoon, at least two large nationalised banks joined the State Bank in selling, bringing the spot rupee to the levels of 43.9450," said a dealer with a private sector bank.

The spot rupee yesterday did not cross the psychological barrier of 44 through the day, much to everyone's relief. It now has reached levels where the central bank is likely to sustain it, for a few more days, said some dealers. But with the sharp depreciation of the rupee last Wednesday when it dropped some 35 paisa to close at 44.07, the central is not taking any chances. Going by what most dealers feel for the days to come, "the rupee is staying put at these levels unless the Reserve Bank of India (RBI) wants to depreciate it some more."

Today, the spot rupee is expected to range between 43.93 to 43.99. The dollar will be bought most at 43.93 levels. and the central bank will not allow the spot rupee to go above 44, dealers said.

The forwards dipped by 2-3 paise in anticipation of the dip in the interest rate by 50 basis points. otherwise, the markets remained quite steady. "The forwards came off despite the higher call rates," said a broker with a foreign bank. There was an air of expectation yesterday, due to the US Fed rates expected to go up by 50 basis points. "People are back and are buying so there seems to be no cause for worry," said a dealer with a private sector bank.