The rupee ended the day at 45.8750/8850 to the dollar, unchanged from the previous close. Opening at 45.87/89, heavy demand for dollars from the oil companies saw the Indian unit hit an intraday high of 45.9750. At the intraday high, exporters sold dollars. Banks, which had gone long on the dollar, reportedly unwound their long dollar positions.
The rupee-dollar was dealt in the 45.92-96 band for the better part of the day.
Further direction of the rupee will be dictated by the Federal Open Markets Committee (FOMC) meeting, which is scheduled on Tuesday. If the US Federal Reserve decides on hiking the overnight Fed Funds rate, then the rupee will depreciate against the dollar, else it will appreciate.
FORECAST : Rupees direction to be determined by the US Feds decision
The rupee premium on the forward dollar ended a tad higher, tracking the spot rupee movement. Importers covered their forward payables through their banks via sell-buy swaps. According to dealers, importers are covering their payables, especially in the far-forward segment i.e. six months to one year. The six and 12 months forwards ended about four paise and seven paise higher respectively, than the previous close. The benchmark six months annualised forward premium ended the day at 1.92% as against last Fridays close of 1.70%. In paise terms, the six months forward premium closed at 39/40 as against the previous close of 35/37. The 12 months forward premium ended the day at 1.65% as against last Fridays close of 1.49%. In paise terms, the 12 months forward premium closed at 71/72 as against the previous close of 63/65.
FORECAST : Forward premiums will track spot rupee movement
The government securities market fell by 10-15 paise in early trades as call money came under pressure. However, with the government announcing a lower than expected issuance calendar, gilts recouped the morning losses. The Central Government announced that it will raise Rs 44,000 crore in the second half of this fiscal i.e. from October 1 to March 31, 2005. Yield on the liquid 7.38% 2015 gilt, which is seen replacing the 7.37% 2014 gilt as the new 10 year benchmark, ended the day at 6.15%, unchanged from the previous close, but lower than morning dealt levels of 6.17%. The benchmark 7.37% 2014 gilt ended the day at an yield of 6.16%.
FORECAST : The gilts market will be eyed for the FOMC decision
Compiled by K Ram Kumar