Rupee witnesses lack luster trade Spot Rupee was boxed in a narrow range of 46.55-46.57 and closed the day at 46.55/56. Rupee has been lately trading firm backed by dollar supplies from exporters and foreign funds. However, the state owned banks have been mopping up excess dollar supplies preventing the Rupee from appreciating sharply. Meanwhile, the latest RBI data on the rupee has indicated that the five-country trade based index of REER of Indian Rupee - base 1993-94, was 102.06 on March 16 compared to 100.38 a week earlier indicating that the Rupee is overvalued. Forward premiums fell sharply on persistent export covers and the 6-month benchmark premium closed lower at 4.76% vs. previous close of 4.91%. Euro tumbles on Welteke’s comments ahead of ECB meet Bundesbank President Welteke set the pace for Euro’s decline when he commented that he favours a “steady hand” policy on interest rates. He also stated that he would be focussed on Eurozone’s inflation rather than growth, as he does not expect a sustained slowdown in Eurozone’s growth. His statements led the Euro to drop to one-week low of 88.64 cents. Also hurting the Euro was the recovery in the US equities with Dow closing over the 10,000 mark again and Nasdaq posting 106 points gain. Sterling too slipped to a low of 1.43 against the dollar following Euro’s weakness. Dollar dipped to a low of 124.15 against the Yen following comments from Japan’s Fin Min Miyazawa. He stated that the finance ministry had no policy to guide the Yen lower in order to spur economic recovery and stimulate exports. Markets anxiously await the outcome of the ECB meet later today.

Interbank Indian Rupee Markets Rupees per dollars Spot 1 Month 3 months 6 months 12 months Bank Sells at 46.5820 46.7480 47.1183 47.7166 48.9363 Bank Buys at 46.5750 46.7257 47.0967 47.6920 48.9093

FxForwards Percentages   1 Month 3 Months 6 Months 12 Months USD Libor 5.02 4.74 4.53 4.48 Forward Premium 4.08 4.54 4.83 5.03 Implied Deposit 9.10 9.28 9.36 9.51 Sovereign Zero Coupon 9.44 9.39 9.31 9.25 Arbitrage 0.34 0.11 -0.06 -0.27

Source: Mecklai Financial Services

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