There was a cheer in the forex market at last as the Rupee gained a healthy six paise in this week as compared to a disastrous rupee fall last week.  There was less demand for the Greenbacks from importers and SBI was also there to make sure that the Rupee remains steady.  Also, due to higher call rates, operators unwound their long dollar positions and parked their funds in the call money market.  Overall, it was a cheerful week for the rupee.  There was a holiday on Thursday and hence there was no trading.  The movement of Rupee against the USD and Euro is shown below.

June 16th, Friday

The rupee ended the day at 44.695/705 to a dollar marginally down from its previous close of 44.69/70 on Friday.  The rupee came under a little bit of pressure in the afternoon when it touched an intra day low of 44.77, but at that point of time SBI entered the market and sold dollars which helped the rupee to recover. The market was effected by a sudden spurt in the call money market. When the call rates rocketed and touched 30% in the afternoon, there were bids for the dollars which pushed the rupee down to its intra-day low but dollar sales by the SBI helped rupee to recover.

June 15th, Thursday

Holiday

June 14th, Wednesday

The rupee gained 3 paise against the US$ ending the day at 44.69/70 against its previous close of 44.72/73.  Dealers were of the view that rupee strengthened because exporters finally sold their dollar receivables. The rupee opened the day at Tuesday''s level and began strengthening immediately when exporters came into the market & sold their dollar receivables, which they had been holding on to while the rupee nose diving.  The rupee recovered 8 paisa since Monday. Demand for dollars from importers is declining.  Also the SBI is in the market selling dollars to prevent the rupee from falling. With exporters coming back into the market and continued support from SBI, the rupee firmed up.

June 13th, Tuesday

Reversing the trend, the rupee ended the day at 44.72/73, 5 paise stronger than Monday's close of 44.77/78.  The decreasing dollar demand from importers helped the rupee to firm up.  The rupee opened the day at 44.77/785 and immediately started strengthening due to decreased dollar demand.  The SBI was also there to sell the dollars.  There was short selling of dollars by some banks to take advantage of weekend swap differentials.  Also with call rates reaching double digit figures, some of the banks unwound their long dollar positions and went to call market to take advantage of the high call rates.

June 12th, Monday

The Rupee ended the day at 44.7775/78, marginally down from its previous close of 44.76/78 on Monday.  There was dollar demand in the market, but SBI was there to make sure that the rupee remains steady.  The rupee opened unchanged from its previous  close and moved up marginally in early deals but then SBI came into the market and sold dollars.  Dealers were of the view that, for sometime the rupee would quote in a steady range.  The strong warning issued by the RBI on Thursday has ended the bank speculation.  Last week, The RBI admitted that it was bank speculation that caused volatility in the market and asked the banks to square off their long dollar positions. This helped the rupee to recover.

Outlook for next week

In the given conditions with no bank speculation, less demand for dollars from importers and SBI in the market, we expect the Rupee to remain steady in the coming week.

Rajneesh Mittal