India Forex - Forex Trading in India

The foreign exchange rates are updated daily from the data as published by Reserve Bank of India. It covers the currencies – US Dollars, GB Pounds, Euro & Yen.

Closing Forex Rate for the last five days:

India Monday 30 November 2009 - The Indian rupee today strengthened by 25 paise to 46.39 against the US currency in early trade on hopes of fresh capital inflows into equity in line with firming trends on other Asian markets.
Dollar’s losses against other currencies too supported the Indian rupee.

At the Interbank Foreign Exchange (Forex) market, the local unit appreciated by 25 paise to 46.39 a dollar. The rupee ended 20 paise lower at 46.64/65 in the previous session on Friday.

Forex dealers said expectations of capital inflows into domestic equities by foreign funds which may open higher in tandem with other Asian markets which were up over 3 per cent in early trade and dollar’s weakness against other currencies, mainly supported the Indian rupee.

India Monday 30 November 2009: Events in Dubai may put fresh pressure on the rupee next week driving it below 47-47.5 levels even as relative safety of government bonds attract investors, treasury dealers said. The US Dollar Index, a gauge of the greenback’s value against six majors, rose as much as 1 percent on Friday, extending its rebound from a 15-month low. It has now strengthened for two straight days and is likely to resume its rise when global markets open on Monday, dealers said.

In fact, such has been the risk aversion among global currency traders that the yen hit its highest level in 14 years on the dollar and other higher-yielding currencies on Friday. Dealers say the short-term rise in the dollar could possible dent the dollar carry trade and lead to its partial unwinding - a possibility that may lead share prices lower in the coming days. A currency carry trade is an investment strategy in which an investor brorrows funds with a relatively low interest rate and uses the funds to purchase a different assets yielding a higher interest rate.

Ridham Desai, managing director, Morgan Stanley said in a recent report that one of the possibilities traders should prepare for is an appreciating dollar index, which can lead to a “detrimental effect on Indian equities.” Dubai said on Wednesday it wanted creditors of state-owned Dubai World and its property subsidiary Nakheel, to agree to a restructuring of its debt.

Forward markets are already predicting that the rupee will weaken in the coming days. Onshore contracts
indicate bets the rupee will trade at 46.77 against the dollar in a month, compared with expectations for a rate of 46.34 two days back. That for non-deliverable-forwards (NDF) were quoting at 46.65 down from 46.13, two days back.

Forwards are agreements in which assets are bought and sold at current prices for future delivery.
KN Dey, director at Basix Forex, a firn that advises corporates on Forex said traders will wait for more clarity to emerge on the Dubai crisis before drawing the knives for the rupee. Krishnan Ramachandran , the Dubai based CEO of Barjeel Geojit said the general expectation is that the Government of UAE will come out with a strong intent or statement of support for Dubai and its related business. This can then arrest the possible sell off that one can expect before the markets open on Monday, he added.

India Monday 30 November 2009: With interest rates ruling near zero in most of the developed world, investors’ search for higher returns has seen hoards of them rushing to emerging markets, triggering a sharp appreciation in currencies and stock prices.

Although the rupee had slipped marginally to Rs 46.56/$ on Friday as foreign institutional investors (FIIs) took money out of Indian markets due to jitters following the Dubai crisis, it is expected to strengthen in medium term. “The markets are likely to get over the nervousness by the end of the week and appreciation of rupee is expected to continue due to strong macro fundemantals like growth and low balance of payments,” said Ananth Narayan, head of Standard Charterd’s money market operation in South Asia.

FII inflows into the country in the calendar year till November have crossed $16 billion, compared with the annual inflow of $20 billion seen in 2007. The year 2008 saw foreign institutions turning net sellers to the tune of $9.36 billion.

Further strengthening of the Asian currencies would also depend on their dependence on exports, as Asian central banks of export-reliant economies have repeatedly intervened to check appreciation to maintain export competitiveness.

Forex market-makers points out that India’s strong fundamentals and narrowing trade deficit is lending solid footing to country’s currency. Movement in euro-dollar currency pair — euro has been appreciating against dollar — is also lending traction to the rupee.

India Monday 30 November 2009: The Indian rupee strengthened on Monday, pulling away from three-week lows hit on concerns about the Dubai debt crisis, as stronger Asian currencies and shares shares raised expectations of fund flows into the local market.

At 10:15 a.m. (0445 GMT), the partially convertible rupee was at 46.39/40 per dollar, 0.5 per cent stronger than its close of 46.64/65 on Friday.

“The rupee has rallied due to the global equities recovery and tracking weakness in the dollar index,” the chief dealer with a large private sector bank said, predicting a range of 46.25-46.45 during the session.

The index of the dollar against six majors was down 0.6 per cent. Most Asian currencies were stronger compared to the dollar.

The dollar edged down against other major currencies on Monday, pausing from sharp gains made last week after the United Arab Emirates offered emergency assistance to banks in Dubai, soothing the market fears about a looming debt default.

Indian shares opened up 0.65 per cent and quickly extended gains to more than 1.5 per cent. Market sentiment improved after many companies said they had only limited exposure to Dubai and on the rise in Asian stocks rose on hopes fallout from any debt default would be limited.

Foreign portfolio buying of about more than $15 billion of stocks this year has helped the rupee rise about 12.5 per cent from a record low of 52.2 in early March. Dubai’s debt crisis would not affect India much, but the government is keeping a close watch and will act to prevent any fallout, Finance Minister Pranab Mukherjee said on Saturday.

One-month offshore non-deliverable forward contracts were quoting at 46.36/46, little changed from the onshore spot rate.

India Saturday 28 November 2009: The rupee recovered from a three-week low on Friday, as markets pulled back from a sharp intra-day fall. The local currency ended 22 paisa lower at 46.67 almost level with its close to last week. The rupee fell to a low of 47.07, as the share market benchmark BSE Sensex fell as much as 3.8%, but local sentiment improved as a number of companies said they had no material exposure to Dubai .

Dubai has shaken financial markets since Wednesday, when it said two flagship government-owned firms planned to delay repaying billions of dollars in debt. State-backed Dubai World has $59 billion of liabilities as per reports.

“From an India perspective, the exposure of Indian companies to Dubai appears to be very limited,” said Ashutosh Datar, strategy analyst of IIFL, the institutional equities arm of India Infoline.

“While in the near-term, risk appetite might wane and capital might flow towards safe haven assets like the US treasuries, but once the dust settles, the medium-term story of capital flows into emerging markets will continue
due to their robust fundamentals,” he added.

The yen hit its highest level in 14 years on the dollar on Friday and also jumped against the Australian dollar and higher-yielding currencies, as stocks fell on concerns about debt problems in Dubai. The dollar fell to 84.82 yen before rebounding back above 85.00.

Agencies reported that Japanese finance minister Hirohisa Fujii said currency moves were now extreme and that it was possible to take appropriate measures helped lift it, but the impact was shortlived. Dollar index, gauge of the dollar’s movement against six majors, rose 0.6%. Government bonds ended unchanged on Friday, which did not see any government bond auctions.

India Friday 27 November 2009: The Indian rupee on Friday plunged by 38 paise against the US dollar in early trade largely on weak Asian cues.
At the Interbank Foreign Exchange (Forex) market, the domestic unit traded at 46.82 a dollar against the last close of 46.44 in first five minutes of trading.

Dealers said the domestic currency came under pressure mainly because of fear of capital outflows by foreign funds as equity market is expected to open lower in tandem with other Asian markets.

However, the dollar’s weakness against some other international currencies capped rupee’s losses.

India Friday 27 November 2009: Following are the indicative currency notes and travellers’ cheques buying and selling rates per unit as given by Thomas Cook India Forex here today.

(Figures in Rupees) ——————— Currencies Buy Sell US Dollar 44.05 49.25 Sterling Pound 72.55 80.50 Euro 65.70 73.25 Australian Dollar 40.35 44.50 Bahrain Dinar 115.90 132.05 Canadian Dollar 40.90 46.05 Danish Kroner 08.55 10.00 Egyptian Pound 06.20 08.90 Hong Kong Dollar 05.50 06.55 Japanese Yen/100 50.80 56.55 Jordan Dinar 58.60 67.90 Kuwait Dinar 139.40 166.10 Malaysian Ringgit 12.40 15.05 New Zealand Dollar 30.60 35.35 Norwegian Kroner 07.50 08.70 Omani Rial 113.40 129.10 Qatar Rial 11.95 13.75 Saudi Rial 11.60 13.40 Singapore Dollar 30.85 36.15 South African Rand 05.40 06.55 Swedish Kroner 06.05 07.00 Swiss Francs 43.45 50.00 Syrian Pound 00.35 01.05 Thai Baht/100 129.40 152.50 UAE Dirham 11.90 13.50 Chinese Yuan 05.00 07.75.

India Friday 27 November 2009: The rupee tumbled from a one-week high on Thursday, as debt problems in Dubai hit the stock market, boosted the dollar and raised concerns that risk aversion may temper foreign inflows. The rupee ended at 46.44/45 per dollar, off an early peak of 46.1350 which was its strongest since November 17 and weaker than Wednesday’s close of 46.21/22.

“The stock market’s sharp fall hurt sentiment. The market would be closely watching the Dubai developments,” said a senior trader with a foreign bank who thought the impact would be temporary. The benchmark BSE share index fell 2%, the most in more than three weeks, as debt problems in Dubai weighed on global stock markets. Foreign portfolio buying of about $15.3 billion of stocks this year has helped the rupee rise nearly 13% from a record low of 52.2 in early March.

Some emerging economies have taken steps to curb inflows of hot money into their economies, but Indian
officials have said they would not follow suit as the country needed investment. India can absorb $100 billion of capital inflows, nearly double what is expected this year, before it needed to take strong restrictive measures, C Rangarajan, chairman of the Prime Minister’s Economic Advisory Council, told Reuters on Tuesday. The dollar’s recovery also weighed on the rupee.

The dollar bounced back from a 14-month low versus the yen as the Dubai concerns hit global risk appetite.
One-month offshore non-deliverable forward rupee contracts PNDF were at 46.48/58, close to the spot rate.

India Friday 27 November 2009 - India’s recent purchase of 200 tonnes of gold from the IMF marked its definitive transition from a forex deficit to surplus country. Although worth just about $6-7 billion, constituting barely 3 per cent of reserves, it sent a message that the governments and central banks of emerging economies can no longer be taken for granted. They want, their reserves away, as much as is prudent and possible, from the US dollar.

As usual, the ball was set rolling in the matter by China, the new heavyweight in the world economy. With its coffers overflowing with $2 trillion of reserves, China is on a desperate asset diversification chase.

It’s most unhappy about the predominance of US Treasury bonds in its portfolio. The Fed’s keeping interest rates near zero and bond yields are 3 per cent with high interest rate risk if inflation reappears and the US budget deficit keeps going up. Further, a consequential or independent depreciation of the dollar will make things worse.

Gold was the obvious hedge against the massive reflation in progress the world over, despite it being considered a ‘barbaric relic of yesteryears’. It not only offers no yield but also costs money to store. Yet it’s risen nearly 50 per cent in less than a year, that too at a time when inflation (at least in the rich economies) is extremely low.

The sharp rise suggests China embarked on its gold buying well before India even thought of it.

Price forecasts
There are two diametrically opposite price forecasts for gold — both from pundits with track records to boast of. Jim Rogers, who foresaw the commodity price boom, predicts gold will touch $2000 as the market takes fright at the state of the US economy and public finances and drives down the dollar.

Nouriel Roubini, who correctly called the sub-prime mortgage crisis and the crash of financial markets and venerated financial institutions, calls Rogers’ prediction ‘nonsense’.

The battle has, thus, been well and truly joined.

Though a late mover, India’s purchase is wise, given the extreme volatility of the dollar as well as other global currencies. The investment has already turned a paper profit for the RBI as the price of gold is up about $100 in the last fortnight.

The search for less risky assets in which to hold reserves will continue.

Some role is already being assigned to the euro and the Japanese yen but there’s a clear limit. Commodities are, therefore, likely to find increasing favour. As an analyst remarked, unlike currencies, they are not anyone’s liabilities.

Don’t be surprised if the reserve basket of the future comprises copper, aluminium, wheat, rice and sugar, apart from the dollar, euro, yen and gold.