Rupee recovers lost ground amid volatile trade The Indian rupee closed stronger at 46.6250, marginally down from its previous close of 46.62. After opening weak at 46.6500 rupee fell to an intraday low of 46.67 before recovering on dollar selling by exporters. Exporters normally bring inward remittances and also liquidate their accumulated dollars before the financial year-end to strengthen their financial position. Forward dollar/rupee premiums softened on receiving interest and after RBI announced special measures to further increase liquidity in the money market. The benchmark 6-months forward premia closed lower at 4.67% annualised compared to Wednesday’s close of 4.96% though call rate remained firm and traded in 8.50-8.90% range. Dollar is likely to find support at lower levels considering overseas dollar strength against the currencies of our major trading partners. Majors weaken against Dollar Majors weakened sharply against the dollar tracking the Euro which eventually dipped to a three-and-a-half-month low of $ 0.8770 after ECB left its key refinancing rate unchanged at 4.75%. The yen touched a global low of 124.65 in mid Asian session against the dollar, on rumours of a large USD shortage ahead of Tokyo fiscal year fixing. Moreover, there was also an expectation that with fiscal year out of the way, Japanese investors would once again look at investing abroad. Pound Sterling fell to a low of 1.4258 due to sharp fall in Euro and the Yen against the dollar. Meanwhile, US Q4 GDP was revised lower to 1% on the quarter from the previously reported 1.1% q/q, the slowest rate since the second quarter of 1995.

Interbank Indian Rupee Markets Rupees per dollars Spot 1 Month 3 months 6 months 12 months Bank Sells at 46.6250 46.9000 47.1650 47.7225 47.8850 Bank Buys at 46.6150 46.8650 47.1400 47.6950 47.8650

FxForwards Percentages   1 Month 3 Months 6 Months 12 Months USD Libor 5.08 4.88 4.71 4.67 Forward Premium 4.41 4.57 4.66 4.65 Implied Deposit 9.49 9.44 9.37 9.32 Sovereign Zero Coupon 9.39 9.38 9.38 9.38 Arbitrage -0.10 -0.06 0.00 0.06

Source: Mecklai Financial Services

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