Dollar marking time ahead of FOMC meeting

June 24, 2008 by Prakash Dhawan · Leave a Comment
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SYDNEY (Thomson Financial) – The U.S. dollar was mixed in midmorning trading in Sydney on Tuesday, marking time ahead of the start of the Federal Open Market Committee’s two-day meeting starting later today.
At 10:50 a.m. (0050 GMT) the dollar was at 107.98 yen from 107.83 yen in late New York trade
on Monday while the euro was at $1.5526 from $1.5514.
The dollar gained against the euro overnight on expectations that the FOMC would put inflation higher up its list of worries when it issues a statement after the meeting’s conclusion on Wednesday.
No change in the Federal Reserve’s fund target rate, now set at 2.0 percent, is expected.
John Noonan, a senior foreign exchange analyst at Thomson Reuters IFR, said trading is likely
to remain whippy ahead of the release of the Fed statement.
‘The market is thin and there is a wide divergence of opinion on how the FOMC will shape its statement after they are expected to announce no-change on Wednesday,’ said Noonan.
He said the talk on Wall Street was that the Fed was likely to ‘talk tough’ on inflation to temper wage expectations even if it might not follow up with aggressive tightening efforts.
‘There is some speculation that the Fed might even mention the U.S. dollar in their statement and this has helped to underpin the dollar ahead of the event,’ said Noonan.
He said until the announcement the euro is expected to trade in a range of $1.5450 to $1.5650.
Sydney 10:50 a.m. (0050 GMT)
U.S. dollar
yen 107.98
Swiss franc 1.0455
Euro
U.S. dollar 1.5526
yen 167.595
Swiss franc 1.6227
pound 0.7902
Pound
U.S. dollar 1.9650
yen 212.091
Swiss franc 2.0536
Australian dollar
U.S. dollar 0.9522
pound 0.4845
yen 102.815
New Zealand dollar
U.S. dollar 0.7571

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Forex reserves down $5

June 22, 2008 by Prakash Dhawan · Leave a Comment
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The country’s foreign exchange (forex) reserves dipped by a whopping $4.96 billion in the week ended June 13, the steepest dip in over two-and-a-half years.
Reserve Bank of India (RBI) has done in the forex market by selling dollars in a bid to keep the rupee from breaching the 43-mark against the dollar. Last time such a huge fall in reserves recorded was in December 2005, when there were huge redemption pressures on the central bank on account of the India Millennium Deposits (IMD) scheme of State Bank of India.

RBI has been consistently intervening in the forex market over the past couple of weeks, with the rupee under pressure from oil companies which bought dollars to provide for soaring crude prices.

Meanwhile, credit and deposits continue to record modest growth figures for the year. According to data released by RBI in its weekly statistical supplement (WSS) on Friday, bank credit growth stood at 25.9%.

The total stock of money in the system went up Rs 22,655 crore during the fortnight ended June 6, to touch Rs 40,99,957 crore.

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