The spot rupee is expected to be in the 46.80-46.95 range this week, while forward premiums may remain in a narrow range due to a general slackening of activity.
"The spot rupee should keep the 46.80/95 range if the Reserve Bank of India (RBI) did not intervene. If low supplies push the rupee down the 47-mark, it is likely to fall further," said a dealer with a foreign bank.
However, some dealers feel even if the RBI intervenes, the rupee may remain range-bound.
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On Friday, the rupee closed marginally weaker at 46.8350/8450, after touching an intra-day low of 46.88/90. After opening at 46.83 level, it steadily slipped as the day progressed on the back of high corporate demand.
Even though the Reserve Bank of India decided to keep quiet, a slew of public sector banks led by the State Bank of India (SBI) came to the Indian unit's rescue by resorting to heavy dollar sells at the behest of the RBI. This helped the currency to recover and close at its opening levels.
The six-month annualised premium is likely to be in the 4.10-4.60 per cent band, while the one-year forward premium annualised should stick to the 4.25-4.80 per cent range.
Forward premiums tracked the spot rupee to close slightly higher at close on Friday. The six-month annualised premium closed at 4.32 per cent, while the one-year forward premium ended at 4.40 per cent.
"With the call rates ramaining remain range bound, there is unlikely to be any pressure on the forward premiums. The IMD inflow has bolstered the forex reserves and this will certainly change the sentiment. The market is likey to remain stable for the time being," pointed out the treasury head of a new private sector bank.