Rupee seen firm this week

The rupee bounced to 45.91 a dollar from 46.13 as inflows and widely weak dollar continued to fuel gains. Steady crude prices offered consistent comfort. Despite lower crude prices, corporate demand remained present capping the upside of the rupee. The rupee broke the 46.00-mark after the US FOMC announcements mid-week.

The rupee faced resistance and came off after touching a peak of 45.82/$. Corporate demand, a correction in emerging economy currencies and NDF arbitrage pulled down the rupee late in the week.

Forward premia lacked direction and activity was dull despite the wide focus of financial markets on interest rates as a whole. Premia rose for a brief period following the FOMC policy and RBI governor’s comments, but overall stuck to a range. Six-month premium ended at 1.24% from 1.3%.Rupee is expected to remain firm and look for a range to settle in. Global factors would continue influencing the unit.