Dealers expect the spot rupee to be fairly stable and be traded in a narrow range of 46.70-46.76 tomorrow. During the week, the spot rupee is expected to be ranged between 46.60-46.85.
According to dealers, the market sentiment would be positive because of the State Bank of India's (SBI) India Millennium Deposit (IMD) plan.
The Reserve Bank of India's reference rate on Friday was 46.74. Forward premiums will track the inter-bank call money rates. Tight liquidity in the call money market will keep forwards above the four-per cent mark. The support level on the upper side for the six-month annualised premiums will be 4.25 per cent.
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"We expect the spot rupee to be in the 46.60-46.80 band during the week. Forward premiums are expected to be volatile and move in tandem with call rates," said a dealer with a foreign bank.
Last week the rupee was dealt between 46.615 and 46.73. The spot rupee touched the lowest level of 46.75 on Friday on account of heavy corporate demand.
However, good dollar supplies from foreign banks and exporters matched the dollar demand, rendering the rupee relatively stable during the week. Dealers were of the opinion that most of the trading during the week was dull as the spot rupee moved marginally.
On Friday, the spot rupee closed at 46.73 against 46.725 on Thursday. Dollar supplies matched the demand, leaving little scope for the rupee to gain or lose against the dollar.
Forward premiums tracked overnight call money rates during the week. Premiums were volatile following the active call money market. Premiums stayed comfortably above the four-per cent level.
On Friday, six-month annualised forward premiums closed at 4.22-25 per cent against 4.13 per cent the previous day. One-year annualised premiums closed at 4.19 per cent against 4.14 per cent on Thursday.
There was some paying in the forward market by foreign banks. Importers are advised to start covering at the 46.65 level. This is a good level for exporters to lock their funds.