The spot rupee was traded in a thin range of 48-48.03 today as against 48.005-48.04 on Friday. Forward premiums rose sharply on the back of tightness in call rates.
The spot rupee opened in the 48.02-48.03 band and touched an intra-day high of 48. The currency, however, weakened a bit in the afternoon to close at 48.02/03.
A dealer with a private sector bank said, "Trading was dull in the market. There was some supply from exporters which strengthened the rupee a bit in the morning. But as public sector banks bought dollars in the afternoon it weakened a bit."
A dealer with a foreign bank said, "When the rupee had been falling, public sector banks sold dollars heavily. They are now buying to rebuild their dollar position."
Forward premiums jumped by 15-30 basis points as call rates surged to 7.80 per cent levels. The six-month premium closed at 6.50 per cent against Friday's closing of 6.20 per cent, while the one-year premium ended at 6.15 per cent (6.01 per cent).
The rupee is likely to remain stable and be traded in the 48-48.05 band tomorrow with supplies coming from exporters.
A dealer with a private sector bank said, "There has been no demand from importers. Exporters are also bringing back their proceeds. In a situation like this, the rupee should strengthen. But it seems that public sector banks will not allow it to strengthen beyond the 48-mark as it can hurt exporters' interest."
Forward premiums are likely to remain firm. Dealers are expecting the six-month premium to be traded in the 6.45-6.55 per cent band, while the one-year premium may be dealt in the 6.10-6.20 per cent band.
A forex dealer said, "There is slight tightness in the money market liquidity situation because of the government security auction. This will keep call rates high and premiums will track it."
