"The spot rupee opened at 45.64-65 and dipped a little on account of some demand. The spot rupee fell lower due to dearth of supplies," said a dealer with a new private sector bank.
"There were not many suppliers as expected after the Exchange Earner's Foreign Currency Accounts (EEFC) norms were issued. Monday saw some selling due to the dull market sentiment," he added.
The demand was not as high as expected with the supplies also being less, despite that corporates have been asked to liquidate 50 per cent of their EEFC balances held outside India by August 23. This account was valued at $2 billion, therefore an inflow of approximately $1 billion is expected.
"But today a net of about $100-175 million came in," a dealer said.
The Reserve Bank of India's (RBI) exchange rate was at 45.66 against 45.77 on August 14.
Today the spot rupee is expected to remain around 45.65-75.
"We may see some selling on account of corporates liquidating their EEFC balances which may strengthen the rupee further," said a dealer with a foreign bank.
Forward premiums moved little in comparison to the spot rupee with the far forwards closing about 5-7 paise higher from the day's opening.
The six-month annualised premium closed at 4.25 per cent, up from 4.10 per cent recorded on Monday.
"Forward premiums opened soft, expecting inflows with ample liquidity. In the morning, there was some receiving on the near-termed forwards," said a dealer with a foreign bank.
"After the announcement of the repo rate, the premiums came off by 5 paise on the near-end and about 3-4 paise on the far-end," he added.
Today forwards are expected to open soft, with the premiums still expected to slide a few paise.
"The market sees the call rate and the repo rate as an indicator of market sentiment. Therefore, a high call rate and repo rate will remain till the RBI thinks the spot rupee is unstable," a dealer with a new private sector bank affirmed.
