Rupee and Premia firm up Spot Rupee closed on a firm note at 46.6350 yesterday on strong FII inflows into the local bourses. FIIs have been net buyers to the tune of $234 mn so far this month, during a period when the Sensex fell by over 900 points. Meanwhile, Sensex gained on fund purchases and closed up 95 points at 3820 . Forward premia firmed in tandem with the call and the 6-month benchmark closed at 4.59%. Call rates rose on concerns over liquidity ahead of corporate tax outflows and a state government bond auction next week. Trinamool Congress’ decision to withdraw its support and Defence Minister George Fernandes’ resignation has heightened the political uncertainty. Though it is unlikely that the NDA government would be toppled, this news could, perhaps , unsettle the rupee. Dollar strengthens across the board Yen fell to a 20-month low versus the dollar and weakened against other major currencies on speculation that the Bank of Japan would reinstate its Zero Interest Rate Policy (ZIRP) at its meeting on Monday. Further, the downgrade of economic assessment by the Japanese government for the second month in a row hurt the Yen. Dollar/Yen shot up to a high of 122.72 this morning though Euro/Yen failed to rally above 110.34. However, Euro/Dollar came in for a pounding and fell to a low of 0.8955 after European Central Bank left interest rates unchanged. This move is viewed negatively by the market considering the prospects of a global economic slowdown. Meanwhile, Sterling failed to capitalise on stronger UK Feb retail sales data and tumbled to a low of $1.4346.

Interbank Indian Rupee Markets Rupees per dollars Spot 1 Month 3 months 6 months 12 months Bank Sells at 46.6850 46.9825 47.2325 47.7925 47.9450 Bank Buys at 46.6750 46.9425 47.2100 47.7675 47.9250

FxForwards Percentages   1 Month 3 Months 6 Months 12 Months USD Libor 5.06 4.94 4.79 4.75 Forward Premium 4.93 4.63 4.71 4.72 Implied Deposit 9.99 9.57 9.49 9.48 Sovereign Zero Coupon 9.11 9.13 9.15 9.18 Arbitrage -0.88 -0.44 -0.34 -0.30

Source: Mecklai Financial Services

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