Weekly Forex Market Report : 6th Nov - 10th Nov

The rupee has faced pressure with buying from many domestic and foreign banks. It opened the week at 46.59/60 and ended at 46.73/735, almost a loss of over 14 paise. The large importer demand in the market driven by thin volumes lead the rupee to weaken almost the whole week. SBI’s Indian Millennium Deposit (IMD) got tremendous response and collected $5.2 bn. But this could not ease the pressure on the rupee. While concerns remained over global oil prices, the flip side of the rupee was that FIIs turned net buyers in the Indian stock markets. The market watched the movement of Euro, Global Oil prices and Foreign fund inflows that could set the direction of the rupee. The IPE Brent futures price for crude oil crossed $32 per barrel for forecast of colder weather in the US and also concerns over low level of heating oil stocks. This itself had an impact on the rupee.The detailed report follows:

Friday, 10th November

The rupee ended at 46.73 / 735, barely changing from its previous close of 46.725 / 735. The rupee opened on a weaker note at 46.74 / 75 as there were concerns over higher global oil prices. The IPE Brent futures price for crude oil crossed $32 per barrel for forecast of colder weather in the US and also concerns over low level of heating oil stocks. The movement of global oil prices, the Euro and also inflows from FIIs set the direction of the rupee.  Foreign funds made net purchases of $186.3 million so far.

Thursday, 9th November

The rupee ended at 46.725 / 735, weaker by about 4 ps from its previous close of 46.68 / 69. This was the fourth day in a row that the rupee weakened. That the trade volumes were thin and the rupee traded in a 2 ps band for most part of the day. The rupee ended last Friday at 46.59 / 60. It has lost over 13 ps to the dollar this week alone. The rupee opened at 46.71 / 73, after its weak opening, adjusted for weekend carrying cost and on some covering of short dollar positions by banks. There was demand from corporates, state run banks. The market watched the movement of Euro, Global Oil prices and Foreign fund inflows that could set the direction of the rupee. In the forward segment, premia softened tracking falling call money rates.

Wednesday, 8th November

The rupee ended at 46.68 / 69, weaker by about 3 ps from its previous close of 46.655 / 665. The volumes of trades were very thin. The rupee opened at 46.655 / 665 and then slipped to 46.70 / 73 as there was importers demand. SBI bought some dollars which prompted other Banks and importers also to buy. The sentiment on the rupee turned bearish following the IMD and improvement in FIIs investments. SBI's IMD raised $5.2 billion and FIIs have again started investing in the Indian stock markets. Foreign Funds made net purchases of equities amounting to $114.4 million so far. In the forward segment, premiums ended sharply higher on payee (sell-buy swaps), triggered by higher call money rates. The six month forward annualized premium ended at 4.21% (92/94 ps) against its previous close of 4.04%, while the 12 month premium ended at 4.12% (188/190) against previous close of 4.05%.

Tuesday, 7th November

The rupee ended at 46.655/665, weaker by about 4 ps from its previous close of 46.61 / 63. The large importer demand in the market driven by thin volumes lead the rupee to weaken. The rupee opened at 46.61 / 63, unchanged from its previous close, but the demand for dollars drove the rupee down to 46.66 / 68. At this point, state run banks sold some dollars, though could not meet the demand. On the whole, the rupee traded in a 6 ps band, 46.61 - 46.67 through out the day. While concerns remained over firm global oil prices, the flip side of the rupee has been that FIIs have turned net buyers in the Indian stock markets. In the forward segment, premiums softened on receiving (buy-sell swaps) by banks. The sixth month forward annualized premium ended at 4.04% (88/90 ps) against its previous close of 4.14%, while the 12 month premium ended at 4.05%(183/185 ps) against previous close of 4.06%.

Monday, 6th November

The rupee ended at 46.61 / 63, weaker about 3 paise from its previous close of 46.59 / 60. The volumes were very thin and purchases of small lots of dollars moved the market. The rupee opened little change from its previous close and moved up on dollar sales. One large sale of dollars took the rupee to an intra day high of 46.525, at which importers stepped in and started heavy buying. With this heavy buying, the rupee lost its early gains and settled at 46.59 / 61 range, ultimately ending at 46.61 / 63. The market waited to see for FIIs investing heavily in Indian Equity markets. Foreign funds have bought equities worth $40.9 million so far in November.  

K.Venu Babu