Weekly Forex Market Report : Sep 18th - Sep 22nd
The rupee depreciated heavily and touched all time lows during the week. The rupee opened the week at 45.83/85 and closed at 46.18/21 with almost a loss of over 35 paise, and in the process touched an all time low of 46.41. India's oil bill which stood at $11 bn in 1999-2000 is expected to be $22 bn if global prices continue at this price. Corporates and importers hedged their positions on fears that the rupee will weaken further. RBI confirmed that it would meet all dollar requirements of Indian Oil Corporation and OPEC also stated that it would step up production by 8,00,000 barrels, since this would be implemented from 1st October, there were rumors that there would be pressure on rupee till that date. RBI warned few banks that it would cancel the licenses for the speculative trading. Thus many banks had to unwind the dollars which forced the rupee to strengthen. However, the news of $4-5 bn issue by SBI to improve the dollar inflows aimed at easing the country's balance of payments position led to strengthen the rupee to some extent. The detailed report follows:
Friday, 22nd September
The rupee ended at 46.18/21 down by about four paise from its previous close of 46.14/17. There was a huge demand from importers. The rupee opened at 45.85/95 stronger by about 22 paise on reports that SBI was targeting to raise $2 bn through an international offering of a five year deposit aimed at the NRI community. India's oil bill which stood at $11 bn in 1999-2000 is expected to be $22 bn if global prices continue at this price. The rupee touched an intra day high of 45.83 in early trades.
Thursday, 21st September
The rupee ended stronger by nine paise at 46.14/17 from its previous close of 46.23/26. There was little importer demand. The rupee opened at 46.25/30 and immediately slipped to an intra day low of 46.31 then immediately bounced back to 46.22/25 in early deals. There were exporters who sold the dollars realising that rupee would not fall any more. The rupee bounced back to an intra day high of 46.12 after the news of $4-5 bn issue by SBI, which would improve the dollar inflows. The issue which is expected to be similar to the resurgent India bonds (RIB) issue of 1998 is aimed at easing the country's balance of payments position which has come under pressure following the news of hike in global petrol prices.Wednesday, 20th September
The rupee closed stronger at 46.23/26 up by almost 12 paise from its previous close of 46.36/38. The rupee recovered after a few foreign banks unwound their long dollar positions on instructions from RBI. The rupee opened the day at 46.35/40 and within the first half hour of trade, slipped to a low of 46.41. RBI went to an extent of warning few banks that it would cancel the licenses for the speculative trading. Thus many banks had to unwind the dollars which forced the rupee to strengthen.
Tuesday, 19th September
The rupee ended at 46.36/38, down by about 37 paise from its previous close of 45.99/46.01. The concerns over rising global oil prices caused heavy dollar buying by corporates. The rupee opened in a range of 46.05/15 and slipped to 46.27 in early trades before recovering to 46.18/23. RBI also gave a statement that the central bank would meet all dollar requirements of Indian Oil Corporation, but this could not meet the rupee flays. Though OPEC stated that it would step up production by 8,00,000 barrels, which would be implemented from 1st October, there were rumors that there would be pressure on rupee till that date.
Monday, 18th September
The rupee ended at an all time low of 45.99/46.01, following hectic dollar buying from corporates and importers. The rupee depreciated by 22 paise from weekend closing value of 45.7800/7850 due to the worries of high crude prices which would impact oil import bill. Further weaker and volatile capital inflows led to an apprehensions of further pressure on the rupee. Opening at 45.83/85, rupee tumbled down to intra day low of 46.00/46.02, before settling down at 45.99/46.01. Corporates and importers hedged their positions on fears that the rupee will weaken further because of prevailing high crude oil prices.
K.Venu Babu