Spot has a roller coaster ride Dollar buying remained the play of the day for the third day in a row as spot rupee sank to 48.39/40 in early trade after opening at 48.3450/3650. Corporates joined banks in bidding the dollar with some rumoured defence-related purchases by state owned banks adding to the pressure. However, spot rupee recovered modestly in the afternoon session and closed at 48.3550/36 on profit taking coupled with mild dollar sales by state owned banks. With the all-time intra-day rupee low of 48.44 within pecking distance, rupee weakness looks set to continue. Premia remained steady with the 6-month forward closing unchanged at 6.21%. Call closed a tad higher at 6.40%-6.50% compared to the previous close of 6.30%. Infosys’s earnings results failed to cheer the market and the Sensex ended down 19 points at 3382. Official comments support Yen, Euro trading with a weak bias Yen derived support against the Dollar as Japanese Finance Minister Shiokawa stated the Yen’s fall was rapid and also on news that the US National Association of Manufacturers (NAM) said the weak Yen was hurting their exports. NAM is to discuss the Dollar’s strength with the US Treasury next week. Yen is trading around 132.35, weaker compared to yesterday's intraday high of 131.92. Euro is currently at $0.8930 after dipping yesterday just under 89 cents on a larger than expected 1.6% fall in German November industrial production. Concerns that the Argentine peso's new peg at 1.40 per Dollar may not hold for long is keeping the Euro trading with a negative bias since European banks have one of the largest exposures to Argentina. US initial jobless claims came in better than expected with a fall of 56000. Dow ended 26 points down at 10068 while the Nasdaq was a pinch higher by 2 points at 2047.

Interbank Indian Rupee Markets Rupees per dollars Spot 1 Month 3 months 6 months 12 months Bank Sells at 48.4100 48.6632 49.1609 49.9139 51.2842 Bank Buys at 48.3950 48.6305 49.1259 49.8789 51.2492

FxForwards Percentages   1 Month 3 Months 6 Months 12 Months USD Libor 1.83 1.83 1.94 2.35 Forward Premium 6.06 6.12 6.17 5.92 Implied Deposit 7.89 7.95 8.11 8.27 Sovereign Zero Coupon 7.11 7.12 7.12 7.12 Arbitrage -0.78 -0.83 -0.99 -1.14

Source: Mecklai Financial Services

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