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Currency Report 29th July 2013

World Exchange Rates:

Currency 1 Rupee 1 US Dollar 1 Euro 1 UK Pound 1 Aus $ 1 Japanese Yen Rupee 1 59.0400 78.4064 90.8308 54.6769 0.6007 US Dollar 0.0169 1 1.3280 1.5385 0.9261 0.0102 Euro 0.0128 0.7530 1 1.1585 0.6974 0.0077

Story Of The Day

Rupee hits five-week high; RBI measures starting to aid

The rupee hit a five-week high on Friday as the Reserve Bank of India's measures to drain liquidity shore up the currency, but the unit gave up most gains as sustained dollar demand from importers to meet month-end import commitments weighed. The rupee's gains come after the RBI followed up on its measures last week to drain cash to defend the rupee with additional tightening measures on Tuesday. The RBI's measures have made holding dollars far more expensive, prompting investors, particularly foreign banks, to liquidate dollar holdings, which helped the rupee. Investors will now focus on the RBI's policy review on Tuesday. The central bank is not expected to raise the policy repo rate or raise the cash reserve ratio, but its statement could provide key details about its plans for the future. The partially convertible rupee closed at 59.04/05 per dollar compared with 59.11/12 on Thursday. The unit rose as high as 58.69, its strongest since June 19. On the week, the rupee rose 0.5 percent, gaining for the third week in a row. Traders said broad losses in the dollar, especially against the euro, also aided the rupee's gains, though that was offset by greenback demand to the tune of around USD 300 million from a large power producer. Some traders, however, expect the rally in the rupee to continue in the short term, especially with the dollar index expected to remain weak in the near term. The onshore forward dollar premiums edged down tracking gains in the rupee. The one-year premium dropped to 473 points from 482 points on Thursday. In the offshore non-deliverable forwards, the one-month contract was at 59.46 while the three-month was at 60.31. In the currency futures market, the most-traded near-month dollar/rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all closed around 59.07 with a total traded volume of USD 2.98 billion.

RIZVI INSTITUTE OF MANAGEMENT STUDIES AND RESEARCH

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Price Ranges
Quote USDINR EURUSD GBPUSD Open 58.85 1.3281 1.5394 High 58.09 1.3253 1.5379 Low 58.71 1.3287 1.5386 Close 59.04 1.3282 1.5385

Data Calendar
Data Release Italy - ISAE sentiment release GB- BoE Secured Lending US - Pending Home Loans Forecast 91 0.4% - 1.5 Actual 91 0.5% - 1.2 Implications Actual = Forecast =Good for currency Actual > Forecast = Good for currency Actual > Forecast = Good for currency

Expect Indian Rupee to appreciate today:

The Indian Rupee appreciated marginally by 0.05 percent in yesterdays trading session on the back of RBI measures to curb volatility in Indian Rupee by tightening liquidity. Further, RBI agreed to pay high yield for short term debt, which supported currency. Additionally, Indian Government steps to curb gold imports along with Indias decision to relax the foreign direct investment (FDI) rules in some sectors supported currency to gain strength. Apart from that, weakness in Dollar index acted as a desirable factor for the Indian Rupee. However, demand for dollars from the importers, weak domestic market sentiments along with the rise in worries over FII outflows prevented sharp gains in the Indian Rupee. Outlook: We expect Rupee to appreciate today on the back of weakness in dollar index. Further, RBI measures to curb volatility in Indian Rupee by tightening liquidity, along with Indian Government steps to curb gold imports may support currency to gain strength. However, mixed global market sentiments, demand for dollars from Importers, high crude oil prices along with the rise in worries over FII outflows may prevent sharp appreciation in the Indian Rupee or even reversal may be seen.

RIZVI INSTITUTE OF MANAGEMENT STUDIES AND RESEARCH