Rise in forward premium may ease pressure on rupee

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pressure on Rupee Further premiums are expected to come down shortly after the Reserve Bank of India is expected to rise from its decadal lows (reserve Bank of India) this week signaled its intention to minimize future intervention in the currency-derivative market by easing instrument-level restrictions to encourage potential. Dollar inflow.

The local unit advanced against the US dollar on Thursday.

“The forward premium is set to increase as banks will swap their deposits received from NRIs through sell-buy futures contracts,” Executive Vice President Bhaskar Panda said.

, “Indeed, the premium had fallen artificially, putting pressure on the exchange rate of the rupee. Going forward the premium is improving and a blessing for the rupee.”

Bloomberg data compiled by ETIG showed futures premiums rose 7-9 basis points on Thursday across maturities of one month, three months, six months and 12 months.

Rupee 79.18/$. closed on

The hike follows a suite of measures announced by the central bank late on Wednesday to contain the fall in the local unit and prevent worsening of imported inflation.

One basis point is 0.01 percentage point.

Around mid-June, premiums fell to 2010-2011 levels, ET reported on June 16.

The rupee closed 0.16% higher at 79.18 on Thursday, a day after the RBI announced measures to boost forex reserves and curb free fall of the local unit. It was the fourth best performing Asian currency for the day. The one-month volatility index fell 11 basis points.

Anindya Banerjee, currency analyst at Kotak Securities, said, “The forward premium had fallen due to RBI’s intervention strategy.” “This was creating an additional pressure on the rupee. The central bank seems to have given a masterstroke by introducing the NRI deposit exemption, which will now serve both the purposes.”

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