Weekly Forex Market Report : 27th Nov - 01st Dec

The rupee opened weak and projected a mixed trend in the week. The rupee opened at 46.84/845 and ended at 46.855/865, with a slight loss in the week. The forex reserves of the country have increased by $1.664 bn to reach $37.077 bn but are still below an all time high of $38.341 bn in April 2000. However, the sentiment on the rupee remained weak with global oil prices remaining firm and dollar strengthening against Euro and other major currencies. Rupee is still expected to be overvalued by about 2% on a trade weighted basis. In the later half of the week, the dollar has been weakening against the Euro on expectations that the GDP growth in the US is beginning to slow down. The rupee has lost over 7.4% since the beginning of the current financial year. The detailed report follows:

Friday, 01st December, 2000

The rupee ended little changed at 46.855 / 865, over its previous close of 46.85/86. The rupee opened at 46.84/86 and firmed up to 46.83/84. Most of the demand came from govt agencies and a fertilizer firm and a software firm. Some state run banks purchased on behalf of customers. The markets awaited anxiously for the RBI governor's speech as he said the reserves of $37.077 bn for November were adequate to meet the high oil import bill. India's oil import bill is expected to be higher than the last year's with the current level of oil prices which continued to rule at $30 a barrel.  

Thursday, 30th November, 2000

The rupee ended at 46.85/86, stronger by about 1 paise from its previous close of 46.86/87. The rupee opened the day slightly stronger from its previous close and firmed up touching an intra day high of 46.8325. There were dollar sales by some exporters whose exports were mainly to Europe. They were cashing on the weakness of the Euro against the dollar over the last few days. The rupee has lost over 7.4% since the beginning of the current financial year. In the forwards segment, premiums rose on the back of paying(sell-buy swaps) pressure from banks.

Wednesday, 29th November, 2000

The rupee ended at 46.86/ 87, stronger by about 2 paise from its previous close of 46.885/89. The rupee ended at an all time closing low, however dollar sales by corporate banks helped the rupee appreciate to some extent. The rupee opened at 46.89/90 and by afternoon it appreciated to a high of 46.785 on the dollar sales by state run banks and exporters. However a large oil firm bought the dollars over throwing the supply which lead more pressure on the rupee. The overall sentiment on rupee remained bearish with global oil prices continuing to rule firm and inflows from foreign institutional investors slowing down. But the weakening of Euro and yen against dollar has come as a positive for the rupee. The dollar has been weakening against the Euro on expectations that the GDP growth in the US is beginning to slow down.

Tuesday, 28th November, 2000

The rupee ended at 46.885/89, weaker from its previous close of 46.875/88 on dollar demand from corporates.The rupee opened on a weak note at 46.88/89 as corporates bought dollars. State run banks were quoting in line with the market, which kept rupee from falling too sharply. They acted on behalf of RBI in the forex market. The sentiment on the rupee remained weak with global oil prices remaining firm and dollar strengthening against other major currencies. And dollar inflows reduced which brought the pressure on rupee. Rupee is still expected to be overvalued by about 2% on a trade weighted basis.

Monday, 27th November, 2000

The rupee ended at 46.875/88, down by over three paise against last Friday's close of 46.84 / 8175, just half-a-paise short of all time low of 46.865/885 hit on Oct 31. State run banks were the main customers of dollars. The rupee opened in a steady range of 46.84/845 and was quoted at 46.835/845 for most part of the day. The forex reserves have increased by $1.664 bn to reach $37.077 bn but are still below an all time high of $38.341 bn in April. However there are still concerns over a weakening of Euro and regional currencies and global oil prices which continue to rule firm.

K.Venu Babu