Weekly Forex Market Report : Oct 30th - Nov 03rd

The rupee has faced the mixed trends in the week with buying from many domestic and foreign banks. It opened the week at 46.75/74 and ended at 46.59/61 and touched the week lowest of 46.89/90 on Wednesday. The rupee gained 9 paise on Monday, lost almost 22 paise on Tuesday, gained 12 paise on Wednesday, gained marginally on Thursday and gained 15 paise on Friday, a massive figures in the respective days. The dollar sales by a few state run banks and the unwinding of long dollar positions by few banks on behalf of RBI to safeguard the pressure on rupee helped to strengthen. The statement by the organization of petroleum exporting countries (OPEC) that it will increase production of crude oil has failed to improve the sentiment on the rupee. The SBIs IMD is expected to bring in about $4 bn dollar when it closes next Monday and this has boosted the sentiment on the rupee to some extent. The detailed report follows:

Friday, 3rd November

The Rupee spurted against US currency on renewed exporter dollar sales and unwinding of long positions by banks. Rupee closed at 46.59 / 61, a 15 ps gain from the overnight 46.74 / 7450. It opened on a positive note at 46.72 / 74 and touched a peak of 46.58 / 60 just before closing. Sentiment improved considerably following reports of good response to the India Millennium Deposit scheme, which will garner fairly good forex inflows. The IMD is expected to bring in about $4 billion. Exporters and Banks resorted to heavy dollar sales throughout the day particularly towards closing hour of business.  The sentiment has shown a turnaround for a better after its recent slide to an all time lows at the start of the week.

Thursday, 2nd November

The rupee ended at 46.735 / 75 marginally stronger than its previous close of 46.745/765. The steady dollar supplies from state run banks helped the rupee strengthen. The rupee opened at 46.745/765 and was quoted at 46.75/77. With the Euro slowly gaining against the dollar, sentiment on the rupee has improved. Rupee had taken a beating against the dollar as it was overvalued on a trade weighted basis after the Euro dripped to a record low against the greenback. There was some dollar sales by exports which met the demand. The SBI's IMD is expected to bring in about $4 bn dollar when it closes next Monday and this has boosted the sentiment on the rupee to some extent. In the forward segment, premia ended lower tracking a firm rupee and as banks received premia (buy sell swaps). The six month forward annualized premium ended at 4.08% (91/93 ps) against its previous close of 4.21%, while the 12 month premium ended at 4.14% (189/191 ps) against previous close of 4.25%.

Wednesday, 1st November

The rupee ended at 46.745 / 765 stronger by 12 paise from its previous close. Dollar sales by state run banks helped the rupee rebound from Tuesday's close of 46.865 / 885 an all time closing low. The rupee opened on a marginally weaker note at 46.86 / 90 on expectations of corporate demand but firmed up in early trades to quote at 46.84 / 86 and was firmed up to 46.79 / 82 level when state run banks came in and sold dollars. The dollar sales by state run banks was at the behest of RBI to guard the 46.9 mark. The inter bank dollar demand eased up following dollar sales by state run banks. Some banks also unwound long dollar positions which helped rupee further appreciate. In the forward segment, premiums closed higher despite of firmer rupee as there was some amount of paying pressure. The market was expecting the announcement of a government bonds option which led to the paying pressure. The sixth month forward annualized premium ended at 4.21% (95/97 ps) against the previous close of 4.04%, while the 12 month premium ended at 4.25% (197/199 ps) against previous close of 4.2%. 

Tuesday, 31stOctober

The rupee ended at 46.865 / 885 sharply weaker by about 22 paise from its previous close of 46.64 / 66. The dollar demand from state run banks and foreign banks towards the close led the rupee to end lower. The rupee opened at 46.64 / 66 unchanged from its previous close and was quoted in a slightly weaker range of 46.66/68 for most time and slipped to 46.775 / 795. There was a heavy dollar buying by foreign banks that were custodians to the funds. But towards end, there was a heavy demand from state run banks and foreign banks on behalf of corporate clients. The statement by the organization of petroleum exporting countries (OPEC) that it will increase production of crude oil has failed to improve the sentiment on the rupee. In the forward segment, premiums ended lower despite a weaker rupee. This was a result of heavy receiving (buy sell swaps) interest by some state run banks. The sixth month forward annualized premium ended at 4.04% (92/94 paise) against its previous close of 4.26% while the 12 month premium ended at 4.2% (194/197 paise), down from its previous close of 4.28%. 

Monday, 30th October

The rupee ended at 46.64 / 66 stronger by about 9 paise from its previous close of 46.74/75. The dollar sales by a few state run banks and the unwinding of long dollar positions by few banks helped the rupee recover. The rupee opened at 46.72 / 74 and was quoted at 46.72 / 73 for most time. However, a sudden rush for the dollars by a few corporates drove the rupee down to a new low of 46.92. The dollar sales by state run banks was expected to be on behalf of RBI, which might have sensed the rupee to cross 47. These banks sold about $ 60 - 80 mn to keep rupee from falling. In the forward segment, premia ended lower tracking a stronger rupee. The six month forward annualized premium ended at 4.26% against its previous close of 4.3%, the 12 month premium ended at 4.28% against previous close of 4.31%.

K.Venu Babu