Weekly Forex Market Report : Jan 22nd - 26th, 2001

The rupee has projected a mixed trend of gaining for the first two days and losing for the other two days. It opened at 46.375/38 and ended at 46.48/49, resulting a loss of over 11 paise in the week. The rupee had appreciated by a whopping 28 paise since January 11 following a consistent rally backed by persistent strong dollar sales by foreign banks, custodians for FIIs and FDIs. There was about $554.9 million inflow till the first day of the week and this trend is expected to continue for few more days. The rupee rose to a high of 46.335 in the week but a large state run bank bought dollars to check its gains. This bank was observed to be acting at the behest of the RBI. It looked like the central bank did not want the rupee to appreciate too sharply. There were large dollar sales by exporters, as they felt the rupee not to fall from the present levels. The detailed report follows:

Friday, 26th January, 2001

Holiday

Thursday, 25th January, 2001

A fresh round of heavy dollar short covering by state owned banks and importers sent the rupee tumbling down against the dollar. The rupee closed at 46.48/49, a whopping 11 paise decline from overnight closing levels of 46.3700/3750 after dipping to an intra day low of 46.49/50. It opened on a weak note at 46.3750/3850. Hectic dollar demand from public sector banks led by the SBI's heavy bidding of the dollar sent the rupee reeling under pressure to 46.46/48. However resistance around 46.47 dollar levels saw some dollar selling by SBI which allowed the rupee to bounce back to 46.44/45. But a large surge in dollar demand from all quarters pushed rupee down to 46.49/50 before settling at 46.48/49 at close.

Wednesday, 24th January, 2001

The rupee declined on fresh dollar demand from state owned banks, ending an eight session string of rallies in generally thin and listless trade at the forex market. The rupee opened at 46.3550/3650 and closed at 46.3700/3500, a 2 1/2 paise fall from Tuesday's close of 46.3450/3500 after trading in a tight band of 46.3550 and 46.3750. Dollar demand from public sector banks at sharply lower levels weakened the rupee slightly but the forex spot traded remained quiet and rangebound in the absence of market moving factors. State run banks mopped up cheap dollars from the market. The rupee had appreciated by a whopping 28 paise since January 11 following a consistent rally backed by persistent strong dollar sales by foreign banks, custodians for FIIs and FDIs. 

Tuesday, 23rd January, 2001

The rupee ended marginally up at 46.345/35 from its previous close of 46.365/375 and firmed up to 46.33/ 34. State run banks jumped into the market and started mopping up dollars. There were large dollar sales by exporters, they sold as they felt that the rupee showed signs of appreciation and is not expected to fall from the present levels. Foreign funds have been net buyers of equities and debt in the Indian stock market during January against being the net sellers in December.

Monday, 22nd January, 2001

The rupee ended a shade stronger at 46.365/375 against last Friday's close of 46.375/38 with good dollar inflows during the day. The rupee opened at 46.375/38, unchanged from its previous close and was quoted at 46.37/38 in most deals. The dollar inflow was very strong and came in from foreign funds. Foreign funds which were net sellers of Indian equities and debt in December, have made net purchases to the extent of $554.9mn during January so far. This trend is expected to continue for few more days. The rupee rose to an intra day high of 46.335 but a large state run bank bought dollars to check its gains. This bank was observed to be acting at the behest of the RBI. It looked like the central bank did not want the rupee to appreciate too sharply. The six month forward annualized dollar premium ended lower at 4.52% (90/91 paise).

K.Venu Babu