The spot rupee ended at a 12-week high of 47.82/83 against the dollar today. The last time it closed at this level was on September 11. During the week, it strengthened by 9 paise. Forward premiums went high as the liquidity in money market worsened on the back of RBI's open market auction.
The rupee opened at 47.86/87 and went up to touch 47.81/82 during intraday trades. The currency, however, closed a bit lower at 47.82/83. Dealers said there were huge inflows because of exports and remittances from abroad.
A dealer with a private sector bank said, "Even though there was good supply in the market, there was very low demand from the importers. There were even rumours of some FDI inflows. All these contributed to the strengthening of rupee against the greenback." According to another dealer, banks across all the categories were selling dollars.
Forward premiums rose sharply reacting to the rise in call money rates. The one-year forward premium ended at 5.96 percent compared with yesterday's 5.85 per cent, while the six-month forward premium went up to 6.30 per cent compared with yesterday's 6.27 per cent.
A dealer with a foreign bank said, "Call money rates were slightly higher today and yields of government security also rose sharply. The rise in the forward premiums was a natural reflection."
The spot rupee is likely to strengthen further during the coming week as forex dealers are expecting more dollar inflows. They, however, said the rise would be gradual.
A dealer with a private bank said, "The apex bank may not like the sharp rise in rupee's fall as it will hamper the exporters' interests. We expect the public sector banks to mop up dollars if it goes up substantially during following days."
Forward premiums are expected go up further as the yields of government securities are likely to increase further during next week.
