Weekly Forex Market Report : Oct 02nd - Oct 06th

The rupee was almost stagnant except for the last day, Friday. It opened at 46.08/11 and ended at 46.11, almost at the same level. RBI has stated that there are no plans to scrap exporters earners' foreign currency (EEFC) account scheme. By this there would be a loss of $1-1.5bn in the forex markets. The pressure on the rupee was relaxed with global oil prices going down. But there are still concerns over oil prices. Crude oil prices were high on expectations that heating oil inventories in US refineries will be low when cold weather spurs demand. The detailed report follows:

Friday, 06th October

The rupee remained range-bound throughout the day to close 4 paise lower at 46.11. The rupee opened lower and traded in a range of 46.08 to 46.11 for nearly the whole day. The demand was small and the volumes traded were thin due to the outward remittances by foreign banks, but the supply was more than adequate to match the demand. The forwards continued to come off for the fourth day, resulting in a net fall of over 30 paise since then. The forwards opened low, and kept falling. Before closing, the forward premium recovered and closed at a net low of 5 to 7 paise lower.

Thursday, 05th October

The rupee ended marginally weaker at 46.075/085, down by about three paise from its previous close of 46.04/05. The rupee opened at 46.06/08 adjusting for the week end cost of carry and then traded in a tight band for the rest of the day. RBI reduced rates by 25 basis points at the one day and five day repo auctions to 9.25%. RBI has been reducing repo rates after seeing that the rupee has started stabilizing against the dollar. The worries over global oil prices spread over the market last week were subsided. Global crude oil prices have begun coming off after the US started releasing supplies from its petroleum reserves to meet the demand for heating oil this winter.

Wednesday, 04th October

The rupee ended at 46.04/05, little changed from its previous close of 46.03/05 and was quoted at 46.035/055 in early trades. RBI had cut yields on its fixed rate repos. It slashed the yield on the one day repo by 25 basis points to 9.5% and the five day repo by 50 basis points to 9.5%. However, the yield on three day repo was unchanged at 9.75%.

Tuesday, 03rd October

The rupee ended at 46.03/04, unchanged from its previous close last Friday. The markets opened on a weak note at 46.08/11 after the RBI said that there are no plans to scrap exporters earners' foreign currency (EEFC) account scheme. Scrapping of the EEFC would have brought about $1-1.5bn into the forex markets. Now that it is not going to be scrapped, it is not going to come in. However bunched up dollar supplies, accumulated over the long weekend, helped the rupee recover. But there are still concerns over oil prices. Crude oil prices are high on expectations that heating oil inventories in US refineries will be low when cold weather spurs demand.

Tuesday, 02nd October

Markets closed on the occasion of Gandhi Jayanthi.

K.Venu Babu