Dollar, Euro High Vs Yen

May 18, 2009 by Prakash Dhawan · Leave a Comment
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The euro and dollar gained to session highs against the yen Monday as risk appetite continued to gain steam in currency markets with stronger stocks. Higher stocks encourage traders’ appetite for risk; declines in equities lead foreign exchange traders back to the major funding currencies, dollar and yen. The euro advanced to Y129.85 and the dollar rose to Y96.14, significant turns after hitting multi-week lows overnight. Stocks will continue to be a key indicator for currencies this week given a data-light schedule, according to strategists. Earlier, euro, Australian dollar and U.K. pound also hit intraday highs against the U.S. unit.

Still, analysts add that the moves in foreign exchange are within recent ranges and are subject to continued swings in equities markets. Daragh Maher, deputy head of foreign exchange strategy at Calyon in London, says currencies are likely to stay within current ranges until the key news for stocks – the status of U.S. banks and the Treasury Department’s plans – turn clearer. Geithner’s plan and the next stage of the U.S. recovery process, getting banks in order, next month,” said Maher – that will be the next big market moving event.

Near noon on Monday in New York, the euro was at $1.3497, up from $1.3488 late Friday. The dollar was at Y96.13 from Y95.10, according to EBS. The euro was at Y129.75 from Y128.28. The U.K. pound was at $1.5302 from $1.5175. The dollar was at CHF1.1185 from CHF1.1224 late Friday. The yen may also be under pressure after Moody’s Investors Service on Monday cut Japan’s foreign-currency debt rating and after comments from Japanese Vice Finance Minister Kazuyuki Sugimoto. He said Monday that the Japanese government is continuing to monitor the foreign exchange market closely after the yen’s recent strengthening.

The negative impact of excessive market volatility on the economy and financial markets is undesirable,” Sugimoto said at a regular press conference. The rally in risk may have also been prompted by elections in India, according to several analysts. Over the weekend, Prime Minister Manmohan Singh’s Congress Party was returned to power with strong backing. Indian stock market surged 17% and the rupee gained 3% on the better than expected results for the general elections,” said Win Thin, senior currency analyst at Brown Brothers Harriman in New York. He said that India’s rupee could break important technical levels, but warned against getting too bullish on India.

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Rupee falls 40 paise against dollar (Forex Trading House)

May 13, 2009 by Prakash Dhawan · Leave a Comment
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The Indian rupee on Wednesday fell sharply by 40 paise to close at 49.70/71 against the dollar following weakness in local equity markets amid dollar demand from banks. However, the market ignored the weak dollar overseas and sustained capital inflows. In active trade at the Interbank Foreign Exchange (Forex) market, the domestic unit resumed higher at 49.25/28 a dollar and immediately touched a high of 49.23.

It later reached a low of 49.72 per dollar before concluding the day at 49.70/71, a fall of 0.81 per cent over its previous close of 49.30/31. The rupee was up by 20 paise on May 12. Forex dealers attributed the fall in the rupee to sell-offs in local equity markets amid uncertainty on the general election results due on May 16. The Indian benchmark Sensex ended lower by 138.38 points or 1.14 per cent. Besides Hong Kong, other Asian markets ended better. Dollar buying by state-run banks, mainly by oil refiners, also put pressure on the rupee. Global crude oil prices were trading over $59 a barrel in Asian trade on Wednesday.

Contrary to market sentiment, the dollar hit a four-month low against a basket of currencies.  Despite good buying by foreign institutional investors (FIIs), the rupee fall could not be stemmed. The Reserve Bank of India (RBI) fixed the reference rate for the US dollar at Rs 49.34 and the euro at Rs 67.53.  Rupee premiums on the forward dollar ended higher on fresh paying pressure from banks and corporates.

The benchmark six-month forward dollar premium payable in October ended up at 66-1/2-68-1/2 paise from 65-1/2-67-1/2 paise Tuesday and the far-forwards maturing in April also finished higher at 111-1/2-113-1/2 paise from 108-110 paise previously. In cross-currency trade, the Indian rupee recovered slightly against the pound sterling while dropped further against the euro and the Japanese yen.

The rupee ended higher against the pound sterling to Rs 75.23/25 from its last close of Rs 75.33/35 while dipped against the euro to Rs 67.76/78 from yesterday’s close of Rs 67.32/34. It also tumbled against the Japanese yen to settle the day at Rs 51.82/84 per 100 yen from previous close of Rs 49.66/68.

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