Weekly Forex Market Report : Jan 15th - 19th

The rupee has projected a strong trend through out the week. It opened at 46.53/54 and ended at 46.375/38, resulting a gain of over 15 paise in the week. The whole week saw a huge inflow of foreign funds from FIIs and FDIs entering the Indian debt and stock markets. There were also state run banks and other public enterprises actively participating according to the times at the behest of the RBI. The total foreign fund inflows for the month of January stood at about $337 million on the first day of the week and ended at around $485.7 mn. Most importers completed their dollar buying the last few days, taking advantage of a stronger rupee. A good deal of dollar inflows are also expected by way of foreign direct investment (FDI) this year. The rupee has gained 26 paise from the start of the calendar year, an appreciation of 0.6 per cent during the month of January so far as part of their portfolio allocations for the country and further inflows over the next few weeks is expected. The detailed report follows:

Friday, 19th January, 2001

The rupee strengthened further and ended at 46.375/38, up by about three paise from its previous close of 46.40/41. The dollar inflows from foreign funds continued for the fifth straight day. The rupee opened at 46.38/40 and was quoted around 46.37/38. The rupee has gained by about 28 paise (0.6%) from the start of the month when it was traded at the 46.66 level. The rupee has appreciated over the last few days mainly because of dollar inflows from FIIs and FDIs. Foreign banks have made net purchases of $485.7 mn in Indian equities and debt during January so far. The state run banks mopped up dollars at around 46.38 level, understandably at the behest of the RBI. The central bank did not want the rupee to appreciate at that level. In the forward segment, premiums ended slightly higher. 

Thursday, 18th January, 2001

The rupee strengthened and ended at 46.40/41 against its previous close of 46.435/44, a gain of about three paise. The dollar inflows from foreign funds continued which aided the rupee's climb. The rupee opened at 46.44/46 and was quoted at 46.42/43 in the most deals. The rupee has gained 26 paise from the start of the calendar year, an appreciation of 0.6 per cent, mainly on account of dollar inflows from foreign institutional investors (FIIs) and foreign direct investment (FDI).  Foreign funds have pumped in excess of $470 million into the Indian debt and equity markets during the month of January so far as part of their portfolio allocations for the country and further inflows over the next few weeks is expected. There was one large foreign bank that was very active in the market and sold dollar. Dollar sales by this bank was well in excess of $100 million.

Wednesday, 17th January, 2001

The rupee ended stronger at 46.435/44, up by about five paise from its previous close of 46.485/495. The dollar inflows continued mostly from foreign institutional investors (FIIs) and foreign direct investment (FDI). The rupee opened at 46.47/48 and immediately strengthened to the 46.44/45 level in early trades and rose to an intra-day high of 46.39 but state-run banks checked any further appreciation by stepping in and mopping up dollar supplies. There was a petrochemicals company that bought dollars every time the rupee strengthened beyond the 46.40 mark. There were a couple of state-run banks also, buying but dollars expected to be at the behest of the Central bank, to check rupee's gains. Foreign funds purchases increased to $432.5 million. A good part of the dollar inflows that the market is witnessing is coming in on account of foreign direct investment (FDI).  In the forwards segment, premiums inched up on account of paying from some banks.

Tuesday, 16th January, 2001

The rupee ended sharply stronger at 46.485/495, up by about five paise from its previous close of 46.53/54. The dollar inflows were quite thin but large dollar sales by exporters helped the rupee strengthen. The rupee opened on a slightly weak note, at 46.545/555 and was traded slightly stronger in early deals at 46.535/545. There were expectations that dollar inflows to be weak as the US markets were closed on Monday for Martin Luther King Jr Day. But dollar demand was very thin which helped the rupee appreciate. The rupee appreciated strongly against the dollar after a large foreign bank and a Bangalore-based public sector bank sold dollars on behalf of exporters.  Most importers completed their dollar buying the last few days, taking advantage of a stronger rupee, so demand was negligible. Foreign institutional investors (FIIs) continued to be net purchasers of equity and debt in the Indian markets and their purchases increased to $387 m. This is against net sales during the month of December.  A good deal of dollar inflows are also expected by way of foreign direct investment (FDI) this year.

Monday, 15th January, 2001

The rupee ended at 46.53/54, marginally stronger than last Friday's close of 46.55/56 with good dollar inflows during the day. The rupee opened the day at 46.53/54 and was quoted at 46.51/52 in most deals. A large foreign banks sold dollars on behalf of a foreign fund. Foreign funds continued to be net purchasers of equity and debt in the Indian markets with their purchases totaling about $337 million during the month so far. Dollar demand in the early part of the day was not much since the US markets were closed on account of Martin Luther King Jr Day.   Many corporates have postponed remittances due to the holiday. However, in later trades a public sector chemicals firm made large dollar purchases valuing over $30 million. A large public sector bank also bought dollars towards the close of trades, possibly at the behest of the RBI. 

K.Venu Babu