The spot rupee weakened to close at a new low of 48.36/3650 against the dollar today as the public sector banks continued to purchase the greenbacks. Forward premiums were stable and the market volume was thin despite ample liquidity in the system.
The Indian currency opened at 48.30/31 and fell sharply to touch the day's low of 48.3850/39.
Forex dealers said that the demand was mainly from the State Bank of India and few other nationalised banks.
A dealer with a private sector bank said, "the state-run banks seemed to be acting on behalf of the Reserve Bank of India (RBI). We feel that the central bank wants the rupee to depreciate as the currency is in a slightly overvalued position."
Dealers, however, said that in addition to the central bank intervention there was a bit of genuine importers' demand as well.
Once the rupee approached the 48.40 mark, public sector banks stepped in with dollar supplies which helped the rupee to recover.
A forex dealer said, "The apex bank does not want the rupee to depreciate very fast as it can generate speculative activity."
In the forward premium market the transaction volume was very low. The 6-month annualised premium today closed at 6.19 per cent against yesterday's closing of 6.21 per cent. The one-year premium were down to 5.93 per cent from yesterday's closing of 5.95 per cent.
A dealer with a foreign bank said, "The premium market is caught between two extremes. On the one hand the rupee has been falling and on the other, the liquidity condition is very comfortable."
The rupee should continue to remain in the 48.30-48.40 band against the dollar tomorrow. In the forward premiums market not much change is expected. The six-month annaulised premium is likely to be in the 6.15-6.20 per cent range while the one-year premium should hover in the range of 5.90-6 per cent.
