Weekly Forex Market Report : 20th Nov - 24th Nov

The rupee was almost flat except for a few days when the rupee lost due to the strong demand from importers and foreign banks exceeding the supply. It opened the week at 46.785/75 and ended at 46.84/875, almost a loss of over 6 paise. The dollar sales were sparked by an improvement in the country's foreign exchange reserves. The forex reserves position of the country rose by $676 million during the week ended November 10, the biggest jump ever in 2000 and presently stand at $35.413 billion against $34.737 bn in the last week. This has been a result of funds from the SBI's IMD flow. However, there were no expectations of the rupee to appreciate as there is a feeling that the rupee is over valued by almost 2% on a trade-weighted basis. Also, there were concerns in the market over the global oil prices and weakening euro and other currencies. The concerns remained with winter months setting in and the actual demand for heating oil expected to firm up oil prices. Foreign institutional investors, who pumped funds into Indian equities at the start of the month, started selling resulting a low figures in net buyings. The rupee was expected to weaken further next week when the large corporates begin making their month-end dollar purchases. The detailed report follows:

Friday, 24th November, 2000

The rupee ended at 46.84 / 8475, weaker by about three paise from its previous close of 46.81 / 815. The rupee opened at 46.83 / 84, lost to an intra-day low of 46.90. The state-run banks sold dollars at this level which made it to recover. There was strong importer demand for the dollars as there were expectations that the rupee will weaken further. Dealers expected the rupee to weaken further next week when the large corporates begin making their month-end dollar purchases. Foreign institutional investors, who pumped funds into Indian equities at the start of the month, started selling resulting net buyings of $ 160-m in equities.

Thursday, 23rd November, 2000

The rupee ended barely changed against extremely thin and lethargic trade at the interbank foreign exchange (forex) market. The rupee opened at around Rs.46.81 / 82, was confined to a tight band of Rs.46.8100 and Rs.46.8250 in muted business before closing at Rs.46.820. A market holiday in New York aided the low key activity. US markets were closed on Thursday on account of "Thanks-giving day". The forex spot market was in a slumber, the exchange rate hardly moved a paise and half. The market lacked direction with the US holiday submitted tone. Meanwhile, the Reserve Bank of India (RBI) fixed the reference rate at Rs.46.82 per dollar against Rs.46.83 fixed on Wednesday. 

Wednesday, 22nd November, 2000

The rupee ended at 46.8175 / 8275, marginally weaker from its previous close of 46.80 / 805. The rupee opened the day at 46.80 / 82 and there was a strong demand from the importers, which made the rupee slip to 46.83 / 84 level at which a large petro chemicals firm sold large lot of dollars. The concerns over global oil prices remained and winter months setting in, the actual demand for heating oil is expected to firm up oil prices. Importers covered their positions on expectations of a rise in global oil prices resulting the country's oil import bill price, putting further pressure on the rupee. FIIs who were net buyers in Indian equities started selling resulting the purchases standing at $186.2 million. In the forward segment, premiums closed higher on the back of paying interest by some banks. The sixth month forward annualized premium ended at 4.15% (83 / 84 ps) against its previous close of 4.12%, while the 12 month premium ended at 4.22% (184 / 186 ps) against its previous close of 4.2%.   

Tuesday, 21st November, 2000

The rupee ended at 46.80 / 805, weaker by about 3 paise from its previous close of 46.765 / 775. The corporate demand for the dollar drove the rupee down. The rupee opened on a weaker note at 46.765 / 785. SBI's IMD which raised a total of $5.5 billion started flowing into the country, boosting the foreign exchange reserves. However, there concerns in the market over the global oil prices and weakening euro and other currencies. In the forward segment, premiums firmed up. The sixth month forward annualized premium ended at 4.12% (82/84 ps) against its previous close of 4.08%, while the 12 month premium ended at 4.2% (183/185 ps) against Monday's close of 4.17%.

Monday, 20th November, 2000

The rupee ended slightly firmer at 46.765 / 775 against last Friday's close of 46.785 / 795. The strong dollar sales by corporates and foreign banks helped the rupee strengthen. The rupee opened little changed from its previous close but firmed up in early deals. The dollar sales was sparked by an improvement in the country's foreign exchange reserves. The forex reserves position of the country rose by $676 million during the week ended November 10, the biggest jump ever in 2000 and presently stand at $35.413 billion against $34.737 bn in the last week. This has been a result of funds from the SBI's IMD flow. The IMD raised a total of $5.5 billion. However, there were no expectations of the rupee to appreciate with this huge forex reserves as there is a feeling that the rupee is over valued by almost 2% on a trade-weighted basis. In the forward segment, premiums ended lower on the back of receiving (buy-sell swaps) by banks. The sixth month forward annualized premium ended at 4.08% (82/84 ps) against its previous close of 4.19%.

K.Venu Babu