Weekly Forex Market Report : Dec 25th - 29th

The rupee has projected a flat trend through out the week. It opened at 46.66/67 and ended at 46.67/68, ended almost at the same level with just a change of 1 paise in the week. The week saw the trade only for three days with the other two days being holidays. Banks which have created short dollar positions to benefit from the high Friday-Monday swap difference over the year end bought back dollars. Several banks which offer custodian services to foreign funds bought dollars. FIIs have been net sellers in the stock market. Markets expect the rupee to be in a rangebound value of 46.60- 46.68 in the coming fortnight and is expected to even firm up further in January. In across currency trades, the rupee remained depressed against the euro, although it attempted a mild rally and eased further against the pound. If there is a cut in Fed rates and the oil prices continue to fall, January is likely to see the rupee supported at these levels. The detailed report follows:

Friday, 29th December, 2000

The rupee closed at 46.67/68 sharply higher from previous close of 46.71/72. It opened at 46.70/72. The rupee rallied against dollar on late exporter dollar sales and unwinding of long positions by banks and ended the year on a positive note after encountering early pressure on residual month-end dollar demand. Banks went long on the dollar in early dealings and pushed the rupee down to 46.74/76 anticipating demand from corporates and importers due to month end considerations. However in the absence of follow up dollar buying interest, banks unwound long positions to enable the rupee to bounce back smartly with sharp gains. The residual month end dollar demand exerted pressure on the rupee but the volumes were extremely thin. Meanwhile RBI fixed the reference rate at Rs.46.75 as against 46.70 fixed on the last working day on Dec 27. After ending the year relatively firm, markets expect the rupee to resume trading for the new year on a positive note as the month end dollar demand has been satisfied. In across currency trades, the rupee remained depressed against the euro, although it attempted a mild rally and eased further against the pound.

Thursday, 28th December, 2000

Holiday

Wednesday, 27th December, 2000

The rupee ended weaker by 8 paise amid dollar demand from corporates and covering of short position by banks. The rupee ended at 46.72/73 against the previous close of 46.645/6525 and firmed up after hitting intra day low of 46.745 as SBI sold dollars in the market. Banks which have created short dollar positions to benefit from the high Friday-Monday swap difference over the year end bought back dollars on Wednesday. A state owned oil company made a small loan payment in Euros on Wednesday while finical institutions also bought a large amount of dollars. Several banks which offer custodian services to foreign funds were buying dollars too. FIIs have been net sellers in the stock market with net sale of shares worth $143.7mn last week. Forward dollar premium reversed Tuesday's upward move and ended lower tracking the lower call money rates. The six month premium ended at an annualized 4% compared with Tuesday's 4.26%.

Tuesday, 26th December, 2000

The rupee closed firmer by around 4 paise in a subdued forex market ending at 46.6450/65 against the previous close of 46.6850/69. The rupee opened weaker at 46.66/67 and touched an intra day low of 46.6850 on the back of month end demand for dollars from public sector banks buying dollars possibly on behalf of corporates. The forwards were marginally up which lead tightening liquidity in call rates. The six month premium ended at 4.15% (3.95%) and one year premium at 4.3%(4.13%). The rupee was expected to be in a rangebound value of 46.60- 46.68 in the coming fortnight and is expected to even firm up further in January. If there is a cut in Fed rates and the oil prices continue to fall, January is likely to see the rupee supported at these levels.  

Monday, 25th December, 2000

Holiday

K.Venu Babu