The Rupee was a little relaxed No exciting action ruled the market yesterday as the market was bent upon reaching equilibrium at 48.2350/2550 levels with dollar demand & supplies evening out. The Rupee opened firmer at 48.24/26 compared to Wednesday’s close of 48.265/275 & bunched up nostro dollar supplies led the Rupee to a high of 48.23 but it eventually turned easier as state run banks purchased dollars to prevent Rupee from appreciating further to retain competitiveness in Asian markets. It slipped to 48.26/265 before closing at 48.2525/48.2575. The panic triggered by the war fears seemed settling down as Pakistan reportedly took action against some terrorist organizations. The 6-month benchmark forward premium closed a tad lower on receiving interest while call money also eased amid comfortable liquidity. US sentiment & stocks rally forced the Euro to capitulate The europhoria of new notes & coins waned quickly and the Euro stumbled as low as $0.8972, guided by positive US sentiments of an early economic recovery. The ECB kept the interest rates steady at 3.25% but commented that the Euro zone growth would stagnate early this year & inflation would continue its downward journey. Hence, the markets still seem to anticipate an ECB rate cut for stimulating the eurozone economy. Sterling fell as far as $1.4361 showing no signs of stalling its losses as apprehensions of the UK joining the EMU harped the markets. In the US, the Dow soared by 99 pts to 10172 & the Nasdaq climbed 65 pts to 2044 on hopes of a quicker US economic recovery despite, the weekly jobless claims soaring to 447k in the week of Dec 29 (Prev 411k). The Yen closed the New York session yesterday at 131.70 levels but has firmed this morning to around 131. With the Japanese markets reopening after 4 days, Japanese exporters would have probably found the opening levels attractive for hedging their receivables. The yen could recover further considering the latest BOJ comments that Japanese exports are competitive even at 130 to a dollar.

Interbank Indian Rupee Markets Rupees per dollars Spot 1 Month 3 months 6 months 12 months Bank Sells at 48.2650 48.5106 49.0250 49.7738 51.1452 Bank Buys at 48.2550 48.4906 49.0025 49.7538 51.1202

FxForwards Percentages   1 Month 3 Months 6 Months 12 Months USD Libor 1.87 1.88 2.00 2.46 Forward Premium 5.98 6.25 6.23 5.95 Implied Deposit 7.85 8.12 8.23 8.41 Sovereign Zero Coupon 7.15 7.15 7.13 7.12 Arbitrage -0.70 -0.97 -1.11 -1.29

Source: Mecklai Financial Services

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