The spot rupee closed marginally weaker at 46.8350/8450 today after a day of good cash demand while forward premiums rose slightly to close a bit higher.
The rupee opened at 46.83, lower by a paisa from Thursday's close, due to residual demand from yesterday and some month-end demand. Spot remained bid and touched an intra-day low of 46.88/90. This led to dollar sale by the State Bank of India (SBI) and some other state-run banks, which covered the demand.
"Yesterday's market closure in New York resulted in a large cash demand today. Supplies were less, which caused the rupee to fall," said a dealer with a foreign bank. "This fall pushed the nationalised banks into selling dollars along with SBI, which allowed the rupee to recover," he added.
The Reserve Bank of India (RBI) reference rate was 46.87 as against 46.82 per dollar on Thursday.
In the coming week, the rupee is expected to stay around 46.80-46.95 with some more intervention expected. "If there is no intervention, the rupee could touch and breach the 47-level," said a dealer with private sector bank.
Forwards were biddish through the day due to tensions on the spot rupee front. Forward premiums got paid on any small dip in the premiums. By the close, forwards were slightly up.
The six-month annualised forwards closed at 4.32 per cent as against 4.25 per cent on Thursday and the 12-month premiums annualised closed at 4.37 per cent as against 4.30 per cent on Thursday.
"The near-terms close about 1-1.5 paise higher while the far-forwards closed about 3-5 paise higher," said a dealer with a foreign bank.
There were rumours that Morgan Stanley Country Index (MSCI) will downgrade India's rating so there was some panic also," he continued.
The six-month annualised premium should remain around 4.10-4.60 per cent through the week.
