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| As per the latest weekly statistical supplement released by the Reserve Bank of India, the foreign exchange reserves on a weekly variation have gone up by $962 million.
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| Moreover, exporters are also likely to bring back receivable fearing a further appreciation in the rupee.
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| Internationally, a fresh round of dollar weakening is also likely to strengthen the rupee.
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| Reports of the US economy are yet to indicate any clear sign of a recovery even though a report released by the International Monetary Fund has hinted at a possible global recovery, said a treasury chief with foreign bank.
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| Dealers feel there will be heavy resistance to the rupee rising above 45.30 on the back of support given by the RBI. However, if it breaks the 45.30 barrier, the Indian currency could go up to 45.20 against the US dollar.
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| Towards the end of the week, a slight weakening of the rupee is expected as month-end corporate demand for dollars might put pressure on the rupee.
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| Last week, the rupee recovered most of the losses incurred in the week before on account of apprehensions of a reduction in interest rates on NRE deposit schemes. The recovery was aided by strong portfolio inflows.
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| The rupee continued to strengthen despite intervention by the RBI through dollar buying by state run banks. Robust economic data on the Indian economy has been one of the primary reasons for the foreign exchange investments flowing into India.
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| Forward premiums
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| Paying interest in the forward dollars market will continue to keep forward dollars at a premium and not at a discount.
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| Most of the paying is likely to be on account of central bank intervention where dollars are being sold in cash to be bought in the forward segment.
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| In the process, forward dollars are booked with the payment of premiums. With the appreciation of the spot rupee, demand for forward dollars had gone down while demand for cash dollars hit the roof.
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| Earlier, with the reduction in interest rates on NRE deposits apprehending withdrawals from dollar deposits, most banks preferred to remain dollar liquid.
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| This resulted in the forward dollars going at a discount. Till the month-end corporate demand for dollars comes up, the RBI is expected to continue to intervene in the forex market to prevent the forward dollar to fall into a dissent again.
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| Dealers said interbank activity in the forex market will be remain subdued this week and most of the demand and supply will be corporate oriented. |
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