The Rupee stays firm expecting good fund inflows. The Rupee opened at 48.7050/7150 from Friday’s close of 48.71/7150. On Friday the Rupee was underpinned by positive sentiments after the VHP dropped plans to defy the court order & to conduct a puja at Ayodhya. The state run banks were seen capping the Rupee’s strength at around 48.71 levels. The forward market experienced receiving pressure from public sector banks. The benchmark 6-month premium closed on Friday at 5.98% compared to the previous close of 6.08%. The call market rate closed higher at 6.75-7% on tight liquidity due to lower supplies from public sector banks. India’s forex reserves jumped $692 mln in week ended 8th March to a record $51.436 bln reflecting heavy FDI inflows. Inflation rate edged up to 1.64% for week ended 2nd March. Dollar recovers on upbeat US data The dollar extended its losses against the European majors on Friday after a better than expected 1.4% rise in German retail sales. However, the greenback found its footing after upbeat US reports. US industrial production posted a largest rise since June 2000 of 0.4% m/m in Feb (prev revised 0.2%). Capacity Utilization overshot forecasts & rose to 74.8% last month (prev rev 74.5%) while the preliminary March University of Michigan consumer sentiment index rocketed to a 15-month high of 95 from the previous 90.7. The Euro rose as high as 0.8867 before ending almost unchanged around 0.8825 and has slipped to the 88-cent level in Tokyo today. Sterling was stable at around 1.4245/50 levels awaiting this week’s data for more direction. Separately, US President Bush belligerently stated that he did not rule out unilateral action against Iraq, which depressed sentiments as traders rushed into safe haven assets. The Swiss franc rose to 1.6489 before closing on Friday around 1.6570. In Japan the Jan current A/c surplus rose to 709 bln Yen, but sustained Japanese selling on talks of funds shifting money overseas after the well-known repatriation pulled the Yen down this morning.

Interbank Indian Rupee Markets Rupees per dollars Spot 1 Month 3 months 6 months 12 months Bank Sells at 48.7200 49.0235 49.5371 50.1987 51.2256 Bank Buys at 48.7100 49.0050 49.5071 50.1737 51.1924

FxForwards Percentages   1 Month 3 Months 6 Months 12 Months USD Libor 1.90 2.01 2.28 2.93 Forward Premium 7.37 6.63 6.04 5.12 Implied Deposit 9.27 8.64 8.32 8.05 Sovereign Zero Coupon 6.51 6.49 6.46 6.47 Arbitrage -2.76 -2.15 -1.86 -1.58

Source: Mecklai Financial Services

For archives of the above analysis, please click here.

A Forex service by eMecklai.com for NRIOL.com visitors. All rights reserved worldwide. Questions or comments on this service, please contact: forex@nriol.com