Rupee recovers on eased dollar demand Rupee opened firmer at 46.955 / 97 as banks went on unwinding their long dollar positions in absence of large corporate demand. Local currency moved in a tight range most of the time on the back of steady dollar supplies from foreign funds and exporters, customary Wednesday selling by banks and reduced panic buying by importers. The rupee had lost nearly 0.28 percent in the last two trading sessions to touch 47.04 on Tuesday due to dollar purchases by a large oil firm. Rupee closed the day at 46.9450/9550 a bit stronger than its Tuesday's close. Forward premia opened the day little higher but eased off during the day to close little changed from yesterday's close at 4.98%. Sensex celebrated the ADR debut of Satyam Comp and closed the day with a gain of 15 points. Euro up on short covering Euro rallied to a 6-day high of 0.8867 in early European trade yesterday on short covering and buying of about 1 bn euros linked to the sale proceeds of France Telecom's and Deutsche Telecom's stake in US telecom operator, Sprint. Euro's strength continued in New York trades and it ended the day at 0.8836. US CPI was benign with a 0.3% rise in April while new home sales rose 1.5%. Euro-zone inflation soared to 2.9% in April from 2.6% in March. Hence, the ECB is unlikely to go for further rate cuts in the current quarter. Cable largely tracked the Euro and tested an intra-day high of 1.4315. Yen recovered most of the losses after touching a 16 day low of 124.05 and closed the day at 123.59.

Interbank Indian Rupee Markets Rupees per dollars Spot 1 Month 3 months 6 months 12 months Bank Sells at 46.9600 47.1595 47.5573 48.1355 49.2900 Bank Buys at 46.9520 47.1347 47.5293 48.1075 49.2620

FxForwards Percentages   1 Month 3 Months 6 Months 12 Months USD Libor 4.08 4.03 4.00 4.20 Forward Premium 4.88 5.00 4.96 4.94 Implied Deposit 8.96 9.03 8.96 9.14 Sovereign Zero Coupon 8.94 8.96 8.95 8.97 Arbitrage -0.03 -0.08 -0.02 -0.17

Source: Mecklai Financial Services

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