Weekly Forex Market Report : Dec 18th - 22nd

The rupee has gained almost all the days in the week except for 1 day. It opened at 46.755/765 and ended at 46.6700/6750, with a gain of over 12 paise in the week. The sentiment on the rupee is now quite bullish with global oil prices showing every sign of further falling. This is expected to bring down India's oil import bill substantially. Global oil prices, which at one point had touched a high of $34 a barrel, are now well below the $30 mark. The benchmark brent crude oil price was ruling well below the #30 a barrel at $23.24 on Friday and the Dubai grade around $20.73 a barrel. This is expected to substantially reduce India's import bill. The euro has also gained against the dollar over the last few weeks and now quotes at a three-month high against the greenback. Over 13 lakh employees of public-sector banks and RBI observed a one-day nationwide strike on Thursday called by the united forum of bank unions to protest the proposed privatization of nationalized banks. In cross currency trades, the rupee declined against both the euro and British sterling, reflecting both the currencies smart rally against the US dollar in overseas business. Low key activity in overseas markets, ahead of the Christmas holidays, also aided the subdued trend. The detailed report follows:

Friday, 22nd December, 2000

The rupee strengthened further on renewed dollar sales by banks in an otherwise quiet and range-bound trade.  The rupee ended at Rs.46.6700/6750 per dollar, a two paise gain from overnight closing levels of Rs.46.69/ 6950. It had appreciated by two paise on Thursday. The rupee opened at Rs.46.69/70 and was confined to a narrow bank of Rs.46.67 and Rs.46.70 in directionless and listless dealings due to lack of market-moving factors. Dollar sales by banks in the absence of adequate demand gave the rupee underlying support. Low key activity in overseas markets, ahead of the Christmas holidays, also aided the subdued trend. In thin volumes, stray dollar sales by banks had a positive impact on the rupee, already supported by a rise in forex reserves and a declining trend in global oil prices. The benchmark brent crude oil price was ruling well below the #30 a barrel at $23.24 on Friday and the Dubai grade around $20.73 a barrel.

Thursday, 21st December, 2000

The rupee firmed up slightly against the US currency on renewed dollar sales in extremely thin and listless trade severely affected by the nation-wide strike by bank employees. Opening around 46.70/72 per dollar, the rupee settled at Rs.46.6900/6950 at the close, a two paise gain from overnight closing levels of Rs.46.7050/7150 in mostly muted business. Activity was limited to a few participants and the volumes were extremely shallow.  Reserve Bank of India (RBI) fixed the reference rate at Rs.46.71 per dollar, as against Rs.46.68 on Wednesday.  Over 13 lakh employees of public-sector banks and RBI observed a one-day nationwide strike on Thursday called by the united forum of bank unions to protest the proposed privatization of nationalized banks. In cross currency trades, the rupee declined further against both the euro and British sterling, reflecting both the currencies smart rally against the US dollar in overseas business.

Wednesday, 20th December, 2000

The rupee weakened slightly on late dollar demand from state-owned banks in moderately active two-way trade.  The rupee closed at Rs.46.7050/7150 per dollar, a two paise decline from previous close of Rs.46.7850/6950 after touching an early intraday high of Rs.46.67/68 on a spillover of overnight dollar sales. The rupee opened at Rs.46.6850/6950 and had appreciated by around eight paise in the last two consecutive sessions due to ample dollar supplies amidst limited demand for the US currency. Public sector banks, led by the State Bank of India (SBI) made last minute spot-dollar purchases and put the rupee under mild pressure after it posted smart gains in early deals. Banks mopped up the excess dollars from the market. SBI is a major player in the forex spot trade and its actions normally sets the market trend. The bank normally buys dollars for large public sector undertakings (PSUs), mainly offshore oil majors.

Tuesday, 19th December, 2000

The rupee ended sharply stronger at 46.685/695, up by about five paise from its previous close of 46.73/735. The forex market was dominated by dollar sales with little demand from importers. The rupee opened at 46.73/74 and was quoted at 46.70/71 in early trades as exporters and corporates sold their dollar receivables. Most exporters had set stop-loss orders at the 46.70 mark so it was expected that they would sell once the rupee crossed this level. State-run banks mopped up dollar supplies once the rupee breached the 46.70 mark and one bank bought large lots of dollars at the 46.685 level. The sentiment on the rupee has been positive for quite some time and the domestic currency may continue to gain if current conditions remain. Global oil prices, which at one point had touched a high of as much as $34 a barrel, are now well below the $30 mark. This is expected to substantially reduce India's import bill. Crude oil imports accounted for one-third of the country's imports during the April-October period this year.

Monday, 18th December, 2000

The rupee ended stronger at 46.73/735, up by about three paise from last Friday's close of 46.76/77. There were good dollar sales during the day and little demand from importers. The rupee opened at 46.755/765 and quoted in the same range during early trades. However, dollar sales by a telecom firm and an airlines company towards the close of trades led the rupee to gain by three paise. The sentiment on the rupee is now quite bullish with global oil prices showing every sign of further falling. This is expected to bring down India's oil import bill substantially. The euro has also gained against the dollar over the last few weeks and now quotes at a three-month high against the greenback. In the forwards segment, premiums ended higher on expectations that short-term liquidity conditions would tighten after corporates make their advance tax payments.

K.Venu Babu