FOREX MARKET
The rupee is expected to hold steady against the dollar this week driven by lacklustre corporate demand and minimal inter-bank trading interest, foreign exchange dealers said on Saturday.
According to them, the rupee is expected to hover around the 42.50-mark and indicated the currency's broad range between 42.45 to 48.57 during the week.
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The forward rupee may hold steady during the week as corporate month-end demand continues, they added. The six-month dollar premium may move between 7.5 per cent and 8.0 per cent, dealers said.
The foreign exchange market will be open for trade on Monday and Tuesday only.
The market will be closed on Wednesday which is the half-yearly close of accounts for banks, and on Thursday and Friday for national holidays.
Dealers said they expected quiet spot trade. "There may be some supplies from exporters as has been seen in the last couple of weeks. However, demand was not much," he said.
Dealers said the rupee may show a mild strengthening bias on account of low demand, a near-absence of speculative activity in the market, and expectations of the country signing the Comprehensive Test Ban Treaty (CTBT) which may turn investor sentiment positive, if only to some degree.
Prime minister Atal Behari Vajpayee last week told the United Nations (UN) that India would consider signing the CTBT which is a moratorium on nuclear tests. This would result in economic sanctions being lifted against India by a host of advanced countries, and a renewal of aid flows from these countries.
Forward dollar trade was also expected to be quiet, they said. "There might be some month-end rollovers (in the nature of sell-buy swaps) by importers. However, these volumes are not much and may be easily absorbed by corporate demand," a dealer said.
Some bankers, however, felt there might be a slight bunching of demand during Monday and Tuesday, on account of the series of holidays during the rest of the week. However, they added, most of the demand would be met with by supplies and only nominal pressure would be exerted on premiums.