Rupee ends firmer on forex inflows Rupee closed firmer on Friday at 48.66/67 from its intra-day low of 48.7150/7250 on continued forex inflows from the televenture company while the state-run banks were also not seen buying dollars aggressively to cap the rupee. The benchmark 6-month premium ended higher at 5.44% vs. the previous close of 5.33% on short covering by interbank players. Call money, however, closed steady at 6.50%-6.60%. The BSE Sensex closed 45 points up at 3602. Inflation fell further to 1.13% for the week ended February 2 while forex reserves were up US$201 mln to 49.766 bln for the week ended February 8. Dollar slips on weak data; Pound takes advantage. The dollar walked a step down giving way to its counterparts as the US University of Michigan consumer sentiment survey’s preliminary February reading recorded a fall for the first time in five months to 90.9 from previous 93. Industrial production figures also weren’t too impressive with a moderate decline of 0.1% m/m in Jan (prev rev - 0.3%), with the capacity utilisation rate slipping to 74.2 vs previous 74.4. Meanwhile the US Producer Price Index edged up less-than-expected to 0.1% in Jan (prev rev -0.6%). The figures from the US show that the pace of recovery would be slow. The Euro couldn’t manage to take disappointing US data much to its advantage, though it showed a modest climb to 0.8730 levels, recouping losses caused due to a slide in French industrial production by 0.9% m/m. Eurozone inflation is likely to be revised higher, thereby dampening expectations of a rate cut by ECB to revive the starving industry. The Pound propelled higher to 1.4330 on weak US data, also underpinned by a surge in UK inflation & good employment data, which has sparked expectations of a raise in interest rates. The Yen did recover its losses (caused by Japan’s record bankruptcies) on repatriation pressure ahead of the fiscal year end. President Bush who is in Japan said that markets should determine currency values, also adding that his government would take necessary steps to maintain a strong dollar.

Interbank Indian Rupee Markets Rupees per dollars Spot 1 Month 3 months 6 months 12 months Bank Sells at 48.6800 48.8793 49.3264 49.9850 51.2221 Bank Buys at 48.6700 48.8625 49.3089 49.9650 51.2021

FxForwards Percentages   1 Month 3 Months 6 Months 12 Months USD Libor 1.85 1.91 2.06 2.49 Forward Premium 4.83 5.28 5.34 5.21 Implied Deposit 6.68 7.19 7.40 7.70 Sovereign Zero Coupon 6.37 6.40 6.44 6.47 Arbitrage -0.31 -0.79 -0.97 -1.23

Source: Mecklai Financial Services

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