Spot rupee is likely to remain between 48.15 and 48.35 against the dollar this week if the India-Pakistan war of words does not escalate.
Forward premiums are likely to remain stable with a downward bias if government paper yields dip marginally.
A dealer with a foreign bank said he does not expect much activity in the forex arena during the week. "There will be some demand from importers, but we expect state-run banks to supply adequate greenbacks to meet that."
In the forward premium markets too, not much activity is expected.
Dealers expect the premiums to go down, but since the US Federal Reserve rate is likely to be cut by another 25 basis points next month, the fall will be limited.
The six-month annualised premium is unlikely to go down below 6 per cent, while the one-year premium should be over 5.90 per cent.
A forex head with a private bank said government paper yields are already low and is likely to dip a bit during the week. "This will put a downward pressure on premiums. But if the Fed cuts the rates afresh, the rate differential (in India and US market) will widen again. This expectation will keep forwards stable."
If the Indo-Pak border situation deteriorates, there will be downward pressure. In that situation the rupee can even test the 48.50 mark, dealers said.
The Indian currency on Friday opened at 48.25/26 and touched the day's low of 48.30/3050 owing to importers' demand.
The currency, however, strengthened later to close at 48.26/27 as demand for dollars fizzled out. The six-month annualised premium ended the day at 6.24 per cent against Thursday's close of 6.27 per cent. The one-year premium closed at 5.96 per cent compared with its previous close of 5.99 per cent.
