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Rupee at 46.98/$; recovers from record low

The rupee ended Tuesday slightly weaker, but off intra-day lows, as banks unwound long dollar positions after the expected importer demand failed to hit the market, dealers said.

Dollar supplies from exporters also helped the rupee off its lows, they said.

The rupee ended at 46.9800/00 per dollar, off 47.0400 hit in some early deals and marginally weaker than Monday's close of 46.9600/9750.

"Exporters were selling at levels above 47 per dollar while importers didn't panic. This forced some banks to unwind dollar positions," a chief dealer in a private bank said.

He added that a large state-run bank also sold dollars, and the sales were believed to have been on behalf of exporters.

Dealers said the rupee was now likely to settle into a range after having lost nearly 0.23 per cent since Friday. The currency's recent weakness was due mainly to purchases by a large oil firm, estimated at around $400 million.

Charts also suggest that the rupee's spell of weakness may be over for now, with the 14-day RSI showing the dollar in overbought territory.

Forward premiums ended lower, tracking easier call money rates and on receiving (buy-sell swaps) by exporters although most banks stayed on the sidelines ahead of the Federal Reserve's rate setting meeting later in the day, dealers said.

Call money ended at 8.30-8.50 percent on Tuesday, lower than Monday's 8.50-8.75 per cent on reduced demand as most banks appeared to have met their cash reserve requirements, dealers said.

The six-month forward premium ended at 4.98 per cent annualised compared to Monday's 5.06 per cent.

Intra-day report

The rupee was weaker against the dollar in Tuesday late morning deals, although trade had settled into a range after an early bout of volatility, dealers said.

Forward premiums were steady to lower, with traders mostly on the sidelines ahead of the Federal Reserve's rate setting meeting later in the day, they said.

At 11:55 a.m., the rupee was quoted at 47.0175/0275 per dollar, little changed from the day's open but weaker than Monday's close of 46.9600/9750.

At current levels, the rupee is around Rs 0.13, or 0.28 per cent, weaker than its weekend close.

The rupee ended Monday at its lowest since April 16 when it hit a new closing low of 47.0000/0200.

"There isn't much corporate demand which is keeping banks from buying also," a dealer in a foreign bank said.

A dealer in a state-run bank said dollar bids from a large oil firm, which had bought dollars since Friday, appeared to be over.

The oil firm's purchases, estimated at around $400 million, were mainly behind the rupee's recent weakness.

Banks which had gone long on dollars on expectations that this firm would continue with its purchases were likely to unwind their positions later in the day and this could help the rupee rebound, some dealers said.

Near term forward premiums opened lower, tracking easier call money rates. The one-month forward premiums opened at 4.94 per cent annualised compared to Monday's 4.98 per cent.

Call money, firm since last week, was easier on Tuesday on reduced demand for funds as most banks appeared to have met their cash reserve requirements, dealers said. In late morning, call money was quoted at 8.6-8.70 per cent, off 9.00 per cent hit in some opening deals.

"But I do not expect much receiving (buy-sell swaps) as most traders are eyeing the Fed and the stance it takes," a dealer in a foreign bank said.

While traders widely expect the Fed to cut rates by 50 basis points later on Tuesday, they are also waiting to see whether it will tone down its easing bias.

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