Rupee seen fairly strong The Rupee opened at 48.76/77 from previous 48.77/7750. The Rupee could be a shade firmer on bunched up dollar inflows accumulated over a long weekend. However, the central bank will probably cap Rupee’s excessive strength through state run banks. India’s forex reserves stood at a record high of $52.189 bln in the week ended March 15. Indian forex market was closed on Monday on account of Moharrum. The 6-month annualised premium closed at 5.73% on Friday. The call money rate closed sanguine at 6-6.25% reflecting ample liquidity. Yen falls to multi week lows The Yen exhibited Japan’s economic weakness and fell to a low of 133.45 on expectations of a capital exodus from Japan come April 1st. Markets are getting prepared for the BOJ’s Tankan survey, which is expected to show a grim outlook for Japanese economy. The Euro touched a low of 0.8757 after the release of data showing that German inflation picked up to 1.8% y/y in March as against 1.7% in Feb. The market feared that high inflation would prompt ECB to raise interest rates, which would in turn be a major blow to the much needed economy recovery in Europe. Meanwhile the downslide was also triggered by long liquidation by Euro bulls after Euro failed last week to breach the all-important 0.8880 resistance. The Euro pared its losses after the US stocks declined on apprehension about the valuation of shares in light of their earnings outlooks. All eyes are glued on the German IFO business sentiment index due today, which is expected to rise for the fifth consecutive month. The Pound was stable, but retraced back from its highs of 1.4284, mirroring the Euro. M&A flows underpinned the Sterling against the Euro after a German utility company purchased a UK company. In the US, the existing home sales declined by 2.8% in Feb to 5.88 mln from previous 6.04 mln, but hopes of an early economy recovery continue to linger.

Interbank Indian Rupee Markets Rupees per dollars Spot 1 Month 3 months 6 months 12 months Bank Sells at 48.7650 49.0598 49.5250 50.1863 51.2300 Bank Buys at 48.7600 49.0502 49.5150 50.1663 51.1970

FxForwards Percentages   1 Month 3 Months 6 Months 12 Months USD Libor 1.90 2.04 2.36 3.06 Forward Premium 7.20 6.21 5.80 5.03 Implied Deposit 9.10 8.25 8.16 8.09 Sovereign Zero Coupon 6.29 6.27 6.27 6.27 Arbitrage -2.81 -1.98 -1.89 -1.81

Source: Mecklai Financial Services

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