Weekly Forex Market Report : Sep 11th - Sep 15th
The week saw rupee losing continuously. The rupee opened strong and gained on the first day but lost that glory from the next day onwards and has led the negative movement. This was the first time the rupee closed lower after the positive trend for the past few days. It opened the week at 45.625/635 and ended at 45.78 compared to the last week's close of 45.6375. There were worries over global crude oil, which were running at the 10 year high values. The import bill was estimated to cross $ 17bn and the large oil pool deficit was expected to put pressure on the balance of payments position. But, the Reserve Bank of India had built up its foreign currency assets and had wholly or partly covered oil importers dollar requirements when required. The renewed tension in west Asia as Iraq accused Kuwait of stealing oil and the US threatening to use military force to defend Kuwait also had an impact over the rupee. The detailed report follows:
Friday, 15th September
The heavy dollar demand from corporates and importers sent the rupee hurtling down as the market was concerned over rising global oil rises. The rupee ended at Rs.45.7800/7850, a ten paise decline from its previous of 45.6750/6850 after dollar short coverings by banks and corporates expected severe pressure on the rupee. Crude oil prices ruled above $34 a barrel on renewed tension in west Asia as Iraq accused Kuwait of stealing oil and the US threatened to use military force to defend Kuwait. The rupee opened weak at Rs.45.70/71 and dipped to a low of 45.78/79, before settling at 45.7800/7850 at the close.
Thursday, 14th September
The rupee opened at 45.65/67 and closed marginally lower at 45.68/6850, reflecting worries about the impact of high global crude prices on the economy. A large state-run oil firm and an automobile firm bought dollars on Thursday, but selling emerged at 45.69 levels to halt the rupee’s fall. The large oil pool deficit was expected to put pressure on the balance of payments position. But, the Reserve Bank of India has built up its foreign currency assets and is wholly or partly covering oil importers dollar requirements off-market when necessary. Some of the rupee’s weakness on Thursday was also due an adjustment to the spot rate at the open to take account of the costs of funding transactions when the two-day settlement period is extended to the weekend.Wednesday, 13th September
The rupee closed lower at 45.635 against the previous close of 45.5950. Forwards rose sharply to close at 4.83%. The rupee opened at 45.595 but due to the demand for dollar it fell to 45.63/64. This was the first time the rupee closed lower after the positive trend for the past few days. Banks bought the dollars for short positions. Corporates too bought the dollars, which led the rupee to fall to an intra day low of 45.64. The demand picked up and the people covered their short positions in the forward market. The import bill was estimated to cross 17 bn $ and the fact of oil price hike hit the rupee under pressure. The six month annualised forward rose about 20 basis points compared to the previous day's close of 4.62%. Interest rate for the 12 month forwards also soared to 4.7% from 4.53% of the previous day.
Tuesday, 12th September
The rupee ended at 45.595/6025, unchanged from its previous close of 45.595/605. The trades were thin and the rupee traded in a tight range through out the day. The rupee opened at 45.59/61, demand from importers was quite thin and the inward dollar remittances by the exporters was also thin. FIIs, who were net buyers in the stock markets were expected to continue buying for some more time. Their investments on last Friday alone was $ 220 mn, the highest purchases in a single day. But there were worries over global crude oil, which were running at the 10 year high values. In the forwards segment, the premium fell after RBI announced a cut in yield on the three day repos from 11% to 10.5% but firmed up later on month end roll overs.
Monday, 11th September
The rupee ended at 45.595/605, stronger by about four paise from its previous close of 45.6375/6425. The rupee opened at 45.625/635 and firmed up with the exporters sale of dollars. Dollar inflows from foreign direct investment (FDI) and FIIs were expected over the next few weeks which would keep the rupee at current levels. The state run banks bought dollars in the morning, presumably at the behest of the RBI which was looking to boost forex reserves. The statement of increasing of oil production by the OPEC countries had made the sentiments on rupee stronger. Oil prices touched a 10 year high of $34 per barrel last week.
K.Venu Babu