The rupee traded in a tight range on Friday. However, volumes were relatively thin as not many banks were shoiwng interest. Foreign banks showed very little buying interest while periodic demand froma few PSU banks kept the rupee in a tight range. “There was very little activity in the market and towards close of trades the volumes traded was extremely thin,” a forex dealer said. On Thursday, Standard Chartered Bank was said to be actively buying dollars of the market for most of the day. PSU banks had offered little support to curb the fall in the rupee. Standard Chartered Bank was believed to be buying dollars on account of the payment it has to make to National Housing Bank over their protracted dispute involving Rs 1,552 crore. light demand from state-run banks in early trade saw the rupee weaken to Rs 48.3600/3700. Overall traded volumes were thin. The rupee closed at 48.3550/3600. The rupee had opened at Rs 48.3500/3600 .
FORECAST: The rupee seen range-bound Monday.
Forward dollar premium remained easy on Friday on the back of easy call rates in near term but there was some paying interest due the slight weakness in the rupee. Premiums have been easing rapidly owing to ample liquidity in the banking system and persistant selling in the market. Supplies from banks who had stocked up dollars over the weekend also helped keep forward premiums easy. Trade was relatively thin in the forward premuim market, keeping in line with the thin trade seen in the forex market. Receeding border tensions have also helped forward premuims to ease. The annualised six-month and one-year forward premia closed at 5.97% and 5.68% respectively. Overall, forward premiums remained range-bound. In month-wise premiums, January dollar traded at 1/1.5 paise, while in the far forwards, April dollar traded at 73/75 paise with December dollar at 250/251 paise.
FORECAST: Forward premiums seen slightly firm Monday.
GiltsPrices in Gilts remained in narrow range on Friday. Trades were being done in a narrow 10-15 paise range. “Absence of any market moving factors was the main reason for a relatively quite market,” a dealer at a private bank said. “The market turned a bit active in late trade but no major change in prices was felt,” the dealer said. The benchmark 10-year yield was held stable at 7.77% level. Prices rose in the morning session but the early gains erased in the afternoon trades on profit booking. the underlying market sentiment continued to remain bullish as there was ample liquidity in the system. Securities prices are expected to come under pressure on Monday owing to the on tap auction of 26 state government bonds announced by the RBI. However, dealers feel that the tighteness sshould be only temporary and market will continue to rise in the near-term.
FORECAST: Prices seen range-bound Monday.
— (Compiled by Srikesh P Menon)