Weekly Forex Market Report : Oct 16th - Oct 20th

The rupee has faced pressure with buying from many domestic and foreign banks. It opened at 46.28/31 and ended at 46.35/36, almost a loss of over 5 paise. The sentiment in the forex market improved after signs emerged that there could be early settlement of the Middle East crisis as peace talks in Egypt progressed. The whole week saw demand for dollars from state run banks towards payments by oil companies. However, concerns still remain how long the peace remains. SBI’s Indian Millennium Deposit (IMD) which is scheduled to launch on Oct 21 is expected not to have any impact on the forex markets as the entire amount of $2 – 4 billion which is expected to be raised will be absorbed by the RBI and it will go into forex reserves of the country. Foreign funds have made net sales of $123.3 million in the Indian equity markets. The detailed report follows:

Friday, 20th October

The rupee ended the day at 46.35 / 36 down by about 5 ps from its previous close of 46.325 / 335. The dollar demand from foreign funds and large petro chemicals pulled the rupee down. The rupee opened at 46.31 / 33 and stayed at steady level for most part of the day. The demand came only towards the close. The rupee moment is expected to be governed by Global equity markets and oil prices. Foreign funds have been net sellers in the Indian equity market. They have made net sales of $123 million so far. Renewed tension in the West Asia would impace the global oil prices.

Thursday, 19th October

The rupee ended at 46.325 / 335 barely changed from its previous close of 46.3275 / 3325. The rupee traded in a narrow 2 paise band of 46.31 to 46.33 for most part of the day. The rupee opened on a weak note at 46.34 / 36 and was quoted at 46.36 / 37 in the early deals. The week opening was a result of adjusting for weekend carrying cost and the sentiment that has been dampened by weak domestic and global markets. Foreign funds have made net sales of $123.3 million in the Indian equity markets. The forex market did not react to the European Central Banks (ECB) decision to leave interest rates unchanged. The ECB decided to leave the benchmark to refinancing rate unchanged at 4.75% following a quarter point increase on Oct 5. However, it was predicted it would increase later this year. In the forward segment premiums ended lower. Six-month forward-annualized premium ended at 4.3% against its previous close of 4.37%.

Wednesday, 18th October

The rupee ended at 46.3275 / 3325 changing little from its previous close of 46.32 / 325. Rupee opened the day stronger at 46.28 / 31 after Israel and Palestine agreed to work towards the peaceful settlement in the Gaza Street. However, concerns still remain how long the peace remains. SBI’s Indian Millennium Deposit (IMD) which is scheduled to launch on Oct 21 is not going to have any impact on the forex markets as the entire amount of $2 – 4 billion which is expected to be raised will be absorbed by the RBI and it will go into forex reserves of the country.

Tuesday, 17th October

The rupee ended at 46.32 / 325 barely changed from its previous close of 46.31 / 32. The rupee bounced back from an intra day low of 46.365 after private and foreign banks sold dollars. The rupee opened at 46.315 / 335 and was trading at 46.34 / 35 in early trades. There was demand from few foreign custodial banks, state run banks in afternoon deals. Dollar demand from State run banks was towards payments by oil companies. The sentiment in the forex market improved after signs emerged that there could be early settlement of the Middle East crisis as peace talks in Egypt progressed.

Monday, 16th October

The rupee staged a fresh rally after market sentiment improved following lessened overseas tensions and easing in global oil prices but ended of early highs with demand from state owned banks. Opening on a firm note at 46.28 / 31, the rupee closed at 46.31 / 32 higher from previous close of 46.33 / 34 after touching an intra day high of 46.27 / 28 due to the unwinding of long dollar positions by bank on news that overseas tensions subsided and crude oil prices have eased. However, dollar demand from state run banks wiped out most of early benefits and it settled at 46.31 / 32..

K.Venu Babu