Weekly Forex Market Report : Oct 09th - Oct 13th

The rupee has weakened drastically on the tensions in the Middle East countries. It opened at 46.105/125 and ended at 46.345/355, almost a loss of over 30 paise. The tensions in West Asia after the Israeli prime minister Ehud Barak issued an ultimatum to Palestinians to stop violence sent crude oil prices to a high of $36.06, a barrel. The Indian Millennium Deposit(IMD), which is expected to garner between to $2-4 bn is not expected to improve the dollar inflows into the forex market as the entire amount is expected to be mopped up by the RBI. The market sentiment was affected badly on S&P downgrading of India's ratings outlook and caused certain amount of nervousness and pushed the rupee down. There were rumors of heavy dollar demand from the Haj committee around $60 mn, which had plunged the rupee, however, the rupee bounced back after news that the Haj remittances were cancelled. The detailed report follows:

Friday, 13th October

The rupee ended at 46.345/355 down by above 6 paise from its previous close of 46.27/29. The rupee opened little change from its previous close and slipped soon after to an alltime low of 46.45 due to the tensions in the middle-east countries which could push up the global oil prices. The demand was mostly from corporates and though it was quite thin, dollar supplies were poor which drove the rupee down. A suicide mission by terrorists on a US destroyer in Yemen left six sailors dead and 35 injured. This news coupled with the face-off with Israeli troops and Palestinians in the West Bank and Gaza strip has sent global prices through the roof and ended at $36.06, a barrel. There were rumours that there would be dollar demand on account of Haj pilgrim payments to emerge soon, which would about $60 million.

Thursday, 12th October

The rupee ended barely changed after rebounding from early intraday lows on late dollar selloff and unwinding of long positions by banks in fairly volatile trade at the forex market. The rupee closed at 46.27/28 little changed from Wednesday's close of 46.26/28 after dipping to early intraday lows of 46.34/36. The rupee opened at 46.28/30 and touched a high of 46.26/27. The market sentiment was affected badly on S&P downgrading of India's ratings outlook and caused certain amount of nervousness and pushed the rupee down to 46.28/30. Banks took further long positions of dollar on expectation of heavy dollar demand from the Haj committee, which pushed the rupee down to intra-day lows of 46.34/36. Dollar demand from foreign funds also exerted downward pressure. However, banks later liquidated their long overbought dollar positions and enabled the rupee to bounce back after news that the Haj remittances were cancelled.

Wednesday, 11th October

The rupee ended at 46.266/275, down by about 9 paise from its previous close of 46.185/1875. The rating agency S&P's revision in its rating outlook to the country caused the rupee to end lower. The rupee opened at 46.20/25 and immediately slipped in early deals to an intra-day lows of 46.35. The Indian Millennium Deposit(IMD), which is expected to garner between to $2-4 bn is not expected to improve the dollar inflows into the forex market as the entire amount is expected to be mopped up by the RBI.

Tuesday, 10th October

The rupee declined sharply on heavy dollar demand following growing concerns of rising crude oil prices over the West Asian tensions. The rupee opened at 46.08/09 and was quoted at 46.13/14, lower from the overnight close of 46.085/09. The tensions in West Asia after the Israeli prime minister Ehud Barak issued an ultimatum to Palestinians to stop violence sent crude oil prices surging over $32, a barrel. Operators took long dollar positions which exerted considerable pressure on the rupee.

Monday, 09th October

The rupee ended at 46.085/09 marginally stronger than its previous close. The rupee opened at 46.105/ 125 and was quoted at 46.09/10 in early dealings. The market saw little demand for the dollar with low supplies. The US currency markets were closed on Monday for the Columbus day. The Tokyo markets too were closed. The market expected substantial inflows as a result of built up dollar supplies from NewYork and Tokyo.

K.Venu Babu