The forward market was active, but saw little movement amid a lot of paying interest (sell-buy swaps) to cash in on the low premiums and a lack of counterparties to receive premiums at these levels. The six-month annualised premium ended unchanged at 2.77%. Premiums dropped sharply on Thursday after the RBI Governor Bimal Jalan said a low inflation and the growth in the business cycle justified a reduction in interest rates.Extremely low premiums had generated interest among banks to tie up long-term funds by swapping dollars and among a few importers to hedge near-term payables, dealers said. The six-month premium had on Thursday slid 30 basis points to close at 2.77 per cent. At close, February dollars were quoted at 7/7.5 paise, March at 17/18 paise, while in the far forwards July ended at 58/59 paise and August at 68/69 paise.
FORECAST: Premiums may rise marginally in case paying pressure is sustained on Monday.
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