Opening the day at 46.70/71 from its Wednesday's close at 46.64/66, the rupee eased in early trades on good demand for dollars.

"It is a thin market. Dollar inflows were not much, and this drove the rupee lower. On Monday, we could see the rupee gaining as bunched-up dollar inflows come back after the recent spate of holidays", e-Mecklai forex consultant N Subramanian said.

Banks went extremely long on dollars in early trade on Friday, in anticipation of good corporate dollar demand later in the day. In late noon trades, a few state-run banks and corporates were seen selling dollars. At close, the rupee was seen a shade higher at 46.74/75. Cash/spot was quoted at 1.10/1.20 paise with cash/tom and tom/spot at 0.80/0.85 paise and 0.30/0.40 paise respectively. The Reserve Bank of India pegged its reference rate against the dollar at 46.78 (46.48).

The rupee has fallen by about Rs 3.25 to the dollar or nearly 7.5 per cent during the calendar year from 43.49/50. The rupee had closed at a low of 46.64/66 on Wednesday, and the market closed with sentiment described as "biddish".

The rupee's fall to a new low of 46.7850/79 has been gentle and orderly, devoid of excessive speculation. Senior dealers were of the view that "The rupee's fall must be seen in the light of the fact that the euro too has slipped against the dollar to 0.8320 levels from 0.8500 thereabouts a week back".

Forward premiums tracked the spot-rupee. The sixth-month and one-year annnualised forward premia closed lower at 4.30 per cent (4.34 per cent) and 4.31 per cent (4.37 per cent). Despite the fall in the spot-rupee to a new low of 46.7850/79, forward premiums softened a tad on scattered receiving by a few state-run banks.

Ample liquidity with call rates settling at 8.50 per cent and RBI maintaining its repos-rate at 8 per cent also helped forward premiums to ease. According to dealers, the market witnessed only moderate trading volumes, and it was the curtailed dollar supply that pushed down the rupee and not the heavy demand.

November dollars quoted at 15/16 paise while in the far forwards, April quoted at 99/100 paise with May at 114/115 paise.

Bond prices were depressed and showed signs of a further downward drift after the fall in the rupee to 46.7850/79 levels. The 11.40 per cent 2008 was traded at Rs 99.98 and the 12.50 per cent 2004 at Rs 105.06. "Bond prices were depressed. The fact that the RBI did not take any measure on the rupee front is seen as indicator that the central bank is fine by the current weakness.