Rupee slips to new lows The Rupee opened lower today at 48.79/83 and slipped further in early trades to 48.84/86. On Friday, the rupee fell sharply and closed at 48.7650/7750 vs. the previous close of 48.6650/6750. Dollar buying by state run banks in the late afternoon led to short covering by other banks. Forward premia were range-bound despite the rupee's fall to new lows. The benchmark 6-month forward premium closed at 5.47%. Call money also eased during the later part of the reporting Friday from opening of 8%-8.50% to close at 6.25%-6.50%. BSE Sensex rose 34 points to close at 3604. Inflation remained unchanged at 1.13% for the week ended February 9 while forex reserves finally crossed US$50 bln to touch US$ 50.208 bln for the week ended February 15. Euro smiles on mixed data; dollar looks on. Concerns over accounting practices in US companies continue to dampen sentiments pummeling the Dollar. Reports of New York Fed investigating JP Morgan Chase for Enron-related transactions, further dithered investors from US markets. Euro tactfully (as always) took dollar’s weakness to its advantage, but nevertheless shied away from 0.88 levels on lack of intrinsic strength. Eurozone’s current account surplus grew in Dec, but portfolio investments into euro area shrank. Separately, French GDP declined for the first time in 5 years by 0.1% in Q4 from the previous 0.5%, bringing down the annual growth rate to 2%. German inflation figures edged up, only to make monetary easing by ECB an uphill task. Sterling mirrored the Euro & stepped on the Dollar as the market awaits Wednesday's release of GDP data for more direction. The Yen could not join other majors to batter the dollar, as the market was circumspect ahead of PM Koizumi’s announcement of measures (if any) to fight deflation. Koizumi is presumably going to address Japan’s thorny bad loan problem, though Japanese officials have denied any attempts to inject liquidity by using public funds. Japanese repatriation seems the only hope, which could underpin the Yen in the near term.

Interbank Indian Rupee Markets Rupees per dollars Spot 1 Month 3 months 6 months 12 months Bank Sells at 48.8500 49.0627 49.5303 50.1995 51.4329 Bank Buys at 48.8300 49.0329 49.5025 50.1695 51.4029

FxForwards Percentages   1 Month 3 Months 6 Months 12 Months USD Libor 1.85 1.90 2.04 2.43 Forward Premium 5.11 5.54 5.51 5.28 Implied Deposit 6.96 7.44 7.54 7.71 Sovereign Zero Coupon 6.53 6.52 6.54 6.56 Arbitrage -0.42 -0.92 -1.00 -1.14

Source: Mecklai Financial Services

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