Weekly Forex and Money market report
Domestic
Forex Market
During this week Indian rupee came under heavy pressure against the
dollar due to state run banks buying dollars for their clients to meet
month end demand. The rupee fell to its another historic low of 46.7850
to a dollar on 27th October due to sustained demand from the corporates
in a market where supplies had dried up. The rupee had depreciated
nearly 7% from the start of this financial year and corporate demand for
amounts a s small as $10-15 million makes the rupee to weaken by 2 to 3
paise due to reduced inflow of dollars into the market. The rupee has
been under pressure over in the recent past due to various reasons like
increasing oil prices, FII demand etc.
On Monday the rupee opened on a weak note at 46.35/3650 to a dollar,
due to flaring up of tension in West Asia. The rupee touched the day's
low of 46.3850 due to banks buying dollars in anticipation of demand
from corporates and gained marginally to end the day at 46.3650/3725 on
squaring the long dollar positions. The premiums on forward dollar were
stable tracking the spot rupee. The benchmark six-month forward ended at
4.35% annualised and the one-year tenor ended at 4.36%.
The rupee opened weaker at 46.38/40 as against the previous close of
46.3650/3725 on oil price worries on Tuesday. The demand for dollars was
mostly from state run banks due to month end demand from corporates. The
rupee ended the day at 46.43/44 to a dollar to the day's low due to poor
inflows of dollars. The premiums on forward dollar came down after
opening higher due to receiving interest from banks (buy/sell) and repo
rates being cut by the central bank. The six-month forward ended at
4.34% annualised and one-year tenor ended at 4.37%.
On Wednesday the rupee opened lower at 46.46/47 to a dollar as against
the previous close of 46.43/44 after adjusting to the spot date due to
Thursday being holiday on account of Diwali. The rupee touched another
historic low and ended the day at 46.64/67 as state run banks bought to
meet clients' month end demand. The premiums on forward dollar went up
in line with the weakening spot rupee and towards the close came down
due to receiving interest at higher levels. The benchmark six-month
forward ended at 4.34% annualised and the one-year tenor ended at 4.37%.
On Friday the rupee opened weaker at 46.67/72 as against the previous
close of 46.64/67 to a dollar on concerns of dollar inflows and firming
of international oil price. The rupee touched another record low of
46.7850 to a dollar due to demand for the dollar from the corporates in
a market where the supply of dollars dried up. The rupee gained
marginally to 46.7250 in the afternoon session due to some selling of
dollars from exporters in the higher levels. The rupee ended the week on
a weak note at 46.75/76 to a dollar. The premiums on forward dollar were
steady whereas the spot rupee weakening was mostly due to the month end
demand for the dollar. The benchmark six-month forward ended at 4.30%
annualised and the one-year tenor ended at 4.31% as against the previous
close of 4.34% and 4.37% respectively.
The spot rupee dollar has weaken nearly 1% this week whereas premiums
were more or less unchanged. The demand for the dollar was more on
Wednesday and Thursday due to the month end and the inflows of dollar
were affected because of fewer participants due to festive season. RBI
kept away from the market amid the volatility though it had brought down
the cut off rate in its repo rates by 50 basis points to 8% giving an
indication that it is not uncomfortable with the present level.
|