FOREX Market
The rupee is expected to trade in the region of 39.50 - 39.55 against the dollar during the course of this week. Six month annualised premiums are expected to rule in the band of 6 - 7 per cent.
In general, it is expected that premiums will rule soft, subject to spot being steady. There should be a receiving interest at 7 per cent, and paying interest when premiums rule in the 6 per cent - 6.25 per cent band.
While the spot rupee has gained some strength in the wake of steady inflows, it goes without saying that the market will be moved by the actions of the State Bank of India.
The Reserve Bank of India has been intervening in the forwards market selectively.
While there has been a sharp drop in the forward sales by Reserve Bank of India from a high of $ 3.190 billion at the end of January, 1998, to $ 1.7 billion by March 31,1998, the apex bank, over the last few weeks, has been sighted in the April and May maturities.
Last week, ahead of the three day bank holiday, the sentiments in the forex market were weak, and the rupee had slipped on Tuesday to a low of 39.67 before closing at 39.60-62.
On Saturday, when the market opened after the 3-day hiatus, the rupee recovered to 39.49-51 after opening at 39.53-56.
Premiums have comes off steadily with six months closing last week at 6.74 per cent.
