The rupee weakened by one paise today to close in the range of 48.6950/70 as public sector banks turned to heavy dollar buying. Forward premiums increased a bit on the back of a stable government security market.
Spot rupee opened at 48.70/71 and slipped to 48.72/73 levels. However, at this level, there was good supply from exporters which strengthened the rupee to around 48.68/69. State-run banks, however, purchased dollars at this level and the Indian unit closed a tad lower.
A dealer with a foreign bank said: "There was very thin demand for dollars from importers, while there was fairly good supply from exporters. However, last-minute dollar buying by nationalised banks stemmed the rupee's gain against the greenback."
In forward premiums, rates jumped after remaining steady for the last couple of days. The six-month annualised premium closed at 6.35 per cent against yesterday's closing of 6.30 per cent. The one-year premium ended the day at 6.17 per cent (6.10 per cent).
The treasury head at a private sector bank said: "There was a view in the market that the premiums have reached the floor and can only go down substantially if the Reserve Bank of India (RBI) cuts the repo rate."
The spot rupee is likely to remain stable in the range of 48.65-48.70 tomorrow. A dealer with a private sector bank said: "It seems that RBI wants the currency to rule in this range for the time being. So we expect any appreciation or depreciation in the currency will be controlled by RBI through state-run banks."
Forward premiums are expected to remain stable and may go up a bit. According to dealers, the six-month annualised premium is expected to remain in the 6.33-6.40 per cent range, while the one-year premium is expected to be in the 5.15-5.22 per cent range.
