FOREX REPORT
Forward premiums rose sharply yesterday following a continued tightness in the money market and steps taken by the Reserve Bank of India (RBI) to cool down gilt prices. The spot rupee closed at 43.6125 against the US dollar compared with 43.62 on Monday.
Forwards moved up by as much as 10 paise, especially in the far forwards, following continued tightness in the money market.
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However, they came off their highs later due to receiving of premiums by some nationalised banks. The January maturity opened at levels of 108-111 paise and closed at 118-119 paise.
Most payers were foreign banks who were looking to stay liquid because of the tightness in the call market.
"The news that the RBI had opened a sale window for government securities implies a lesser degree of liquidity in the market," said a dealer with a private bank.
"Also, there were rumours of an impending state government auction. Both these factors caused tightness in the market and led to forwards moving up."
While foreign banks were the main buyers of forward dollars, dealers said towards the evening, a large nationalised bank was seen to be selling dollars in the longer maturities and this caused forwards to ease to some extent.
In contrast the spot rupee remained range-bound between 43.61 to 43.63 with little to move the market. This is in contrast to Monday when demand from a large Delhi-based telecom major caused the rupee to slide to 43.64 before closing higher.
Dealers expect forwards to remain high
for some days while the spot rupee is seen in a groove.
In the international markets, the pound weakened against the dollar and was traded against it 1.5859 at the time of close at the Indian market. The euro was traded at 0.9807 while the yen was at 109.20 to the dollar.
The closing levels of annualised premiums were 1 month -3.96 per cent (3.31 per cent on Monday); 3 months -3.37 per cent (2.94 per cent ); 6 months -3.04 per cent (2.76 per cent ); 9 months -2.92 per cent (2.69 per cent ); 12 months -2.90 per cent (2.77 per cent).
Cash tom and Tom-spot closed at 0.50-0.75 while cash spot closed at 1-1.25.
Premiums in paise closed at February -
7.5-8.25(6.25-6.75 on Monday) March - 19-20(16.75-17.5); April - 29-31 (26-27); May -39-41 (35.5-36.5); June -49-51 (44.5-45.5); July -59-61 (54.5-55.5); August -69-71 (63.75-64.75); September -78-79 (73.5-74.5); October -88-89.5 (82.5-83.5); November -99-101 (92-93); December-108-109.5 (101.5-103) ; January - 119-121(112.5-113.5).
The rupee closed against the Euro at Rs 42.77, against the pound at Rs 69.16 and against 100 Japanese yen at Rs 39.93.