Rupee ends unchanged on the last day of the financial year Rupee closed at 48.80/8050 last Thursday almost unchanged from its previous day’s close. The forex markets remained dull on the last day of the financial year and most of the banks also refrained from taking fresh positions. Forward premia eased across all tenors with mild receiving interest on expectations of a rate cut in April. The benchmark 6-month forward premium closed lower at 5.62% vs.5.65% previous close. Premia may probably fall further today following the Finance Minister’s statement yesterday that he sees a further softening of interest rates in 02-03 & a downward trend in CRR in the long run. The new EXIM policy appears encouraging but the key is quick implementation. Meanwhile, inflation dipped to 1.44% for the week ended March 16 while forex reserves surged by a whopping $1.128 bln to a record high of $53.317 bln for the week ended March 22. Middle East fears caught the Dollar by surprise The market was dominated by tensions in the Middle East where the protracted conflict between Israelis & Palestinians acted as a damper in an otherwise widely anticipated pro dollar scenario. The US ISM index of manufacturing conditions rose unexpectedly in March to 55.6 from 54.7 in the previous month -- indicating that the industry has begun to look up from its long drawn slump. But jittery conditions in the Middle East, expected to further entangle the US in to ”quick sand” kind of a situation prompted market players to turn to safe haven assets. The Swiss franc gained smartly reaching a high of 1.6589 & helped to pull up European majors against the Dollar. US stocks also slid after a statement from Merrill Lynch that soaring oil prices and higher interest rates could dampen consumer spending. However, the Dow recouped most of its losses while the Nasdaq ended up. The Euro reached a high of 0.8820 and Sterling followed suit soaring to a high of 1.4426 but both backtracked later after some improvement in US stocks. The market seemed very edgy about Japan as the BOJ’s Tankan diffusion index recorded -38 in March unchanged from its previous reading, but the index halted its yearlong fall. There were also concerns of investors in Japan shifting funds offshore in the new financial year, thus pressuring the Yen.

Interbank Indian Rupee Markets Rupees per dollars Spot 1 Month 3 months 6 months 12 months Bank Sells at 48.8000 49.0253 49.4968 50.1312 51.2127 Bank Buys at 48.7950 49.0103 49.4818 50.1112 51.1877

FxForwards Percentages   1 Month 3 Months 6 Months 12 Months USD Libor 1.88 2.03 2.33 3.00 Forward Premium 5.42 5.67 5.43 4.92 Implied Deposit 7.30 7.70 7.76 7.93 Sovereign Zero Coupon 6.13 6.14 6.16 6.18 Arbitrage -1.17 -1.57 -1.60 -1.74

Source: Mecklai Financial Services

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