Log in
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Dynamic quotes 
News: Latest News
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance Pro.CalendarSectors 
All NewsEconomyCurrencies & ForexEconomic EventsCryptocurrenciesCybersecurityPress Releases

India one-month dollar forward premium at highest in two decades on large dollar flows

05/04/2021 | 04:59am EDT
FILE PHOTO: A cashier displays the new 2000 Indian rupee banknotes inside a bank in Jammu

MUMBAI (Reuters) - Near-term forward premiums in India surged on Tuesday with the one-month dollar/rupee premium trading at its highest level in more than two decades as massive dollar inflows towards an initial public offering skewed prices.

The partially convertible rupee was trading largely steady at 73.91/92 per dollar at 0830 GMT compared to its close of 73.9150 on Monday after earlier rising to 73.7725 levels.

"As long as the carry is at such elevated levels, no one will go long dollar," the head of foreign exchange trading at a private bank said.

A slight fall in local equities which were down 0.1% each, combined with the global dollar strength, kept a cap on the rupee's early gains.

The U.S. dollar extended gains, unwinding a month long decline as investors weighed chances that interest rates will be forced higher by a U.S. economic recovery and awaited upcoming data and policy speeches for clues.

India's one-month forward premium was quoted at 0.51 rupee after having touched 0.64 rupee earlier in the session, its highest since at least 2000.

The 1-year forward premium touched 4.00 rupee, its highest since August 2016.

"It is mainly due to surplus dollars lying in the system, accumulated mainly because of offshore unwinding and it has been further aggravated by Powergrid flows," a separate dealer with a private bank said.

PowerGrid InvIT's initial public offering closed for subscription on Monday and had attracted a total subscription of $2.78 billion.

Traders said the sudden unexpected surge in forward premiums has made the spot market highly illiquid and volumes are likely to stay subdued until the forward premiums correct.

"Many banks are sitting on large losses due to such erratic moves in forwards. I feel RBI will have to come out with some solution to it," said Paresh Nayar, head of forex and fixed income trading at First Rand Bank.

(Reporting by Swati Bhat; editing by Philippa Fletcher)

By Swati Bhat

© Reuters 2021
Latest news "Economy & Forex"
05:57pELON MUSK : Dogecoin loses third of price after Elon Musk calls it a 'hustle' on 'SNL'
05:26pNZ's a2 Milk cuts sales view on China consumer woes, shares slump
03:13pFord recalls 661,000 Explorer SUVs in North America
03:07pFord recalls 661,000 Explorer SUVs in North America
02:15pU.S. CDC Reports Total Deaths Of 578,520 Due To Coronavirus As Of Yesterday Versus 577,857 In Previous Report On May 8
02:00pUK rail operators withdraw some Hitachi trains due to cracks
01:48pJerusalem tense over evictions and holidays
01:20pEESC EUROPEAN ECONOMIC AND SOCIAL COMMITTEE  : #EuropeDay 2021, EESC makes a difference now more than ever
01:14pECONOMY WEEK AHEAD  : Inflation, Retail Sales, Industrial Production
01:13pBiden Administration to Name Thea Lee to Top Labor Post -- 2nd Update
Latest news "Economy & Forex"