Market News
Dollar/rupee near forward premiums rise post RBI intervention - REUTERS
By Nimesh Vora
MUMBAI, Feb 14 (Reuters) - The dollar/rupee near forward premiums pushed higher this week on the back of the dollar liquidity spurred by the Reserve Bank of India's intervention while far forward premiums declined.
The 1-month forward dollar/premium hit 22.5 paisa on Wednesday, up from 17.5 paisa last Friday. The RBI intervened heavily on Monday and Tuesday to prevent the rupee from slipping past the 88 level.
The central bank's dollar sales boosted the U.S. currency's liquidity, which in turn pushed the overnight swap rates higher and that had an impact on the near-term forwards, a currency trader at a bank said.
Hedging interest after the recovery in the rupee may have contributed to the run higher in near-term forwards, he said.
The rupee , having dropped to an all-time low of 87.95 on Monday, rallied past 86.50. On Friday, it was last quoted at 86.8775 to the U.S. dollar.
While the near-term forward rose this week, far forwards dropped thanks to buy/sell swaps by the RBI.
On Monday and Tuesday, when the Indian central bank sold dollars to support the rupee, it conducted buy/sell dollar-rupee swaps to moderate the impact of its intervention on rupee liquidity, per traders.
