Rupee continues to depreciate versus dollar in the open market
Monday, 16 February 2009 17:00
Forex Research -
Open Market Comments
Demand of US currency rose in the local market as rupee shed 0/10 paisas more on the local desks versus dollar. The American currency kicked off new day’s trading at Rs.79/10, appreciated further and was trading at Rs.79/20 at close of markets on Monday. Thus, rupee ended another day on a negative note versus dollar in the open market. In the international, the U.S. dollar gained to $1.2777 per euro from $1.2862 in New York last week, and climbed to 1.1662 Swiss francs from 1.1590. The British pound fell 0.9 percent to $1.4233 and weakened 0.2 percent to 89.75 pence per euro. The G-7 repeated its traditional message that “excess volatility” and “disorderly movements” in exchange rates must be avoided. The group accounts for about two-thirds of the world economy and is composed of the U.S., Japan, Germany, U.K., Italy, Canada and France. Demand for the dollar may weaken after the Wall Street Journal reported General Motors Corp. will ask the U.S. government to provide aid to fund its operations or to provide financial support should it declare bankruptcy,
The U.S. automaker needs at least another $5 billion in government loans to keep operating beyond the first quarter and prevent it from filing for bankruptcy, the newspaper said Feb. 14, citing unidentified people familiar with the company.
“We need to watch closely developments about a turnaround plan at General Motors,” said Takashi Kudo, director of foreign- exchange sales in Tokyo at NTT SmartTrade Inc., a unit of Nippon Telegraph & Telephone Corp., Japan’s largest fixed-line telephone company. “If GM files for Chapter 11 just as the weekend report had said, it will certainly trigger selling of the dollar.”
General Motors and Chrysler LLC, which had previously won approval for $17.4 billion in U.S. loans to prevent them from running out of cash for operations, must submit a progress report to the government by Feb. 17 as a condition of the loans. The automakers are seeking concessions from unions, lenders and creditors to comply with terms of the assistance.
Against Pound Sterling, rupee shed 0/06 paisas on Monday. The cable started off new day’s trading at Rs.112/40, posted gains and was trading at Rs.112/46 at close of markets. Thus, rupee gave up 0/06 paisas versus British currency. On the international desk, the pound also weakened against the dollar and the euro after the G-7 finance chiefs also avoided any reference to the U.K. currency.
There was “no mention, discussion of the pound” at the G-7 meeting, Callum Henderson, head of global currency strategy, and Thomas Harr, senior currency strategist, at Standard Chartered Plc in Singapore, wrote in a research note today. “This may prove negative for sterling. Euro-pound in particular is likely to bounce on the back of this omission.”
The U.K. economy will shrink 3.3 percent this year, instead of the 1.7 percent predicted in November, the Confederation of British Industry said today. By the end of this year, the economy will have contracted for six consecutive quarters, it said.112.46
Rupee showed recovery versus Euro as demand of Euro remained weak in the local market and single currency’s losses against Japanese Yen and US dollar in the International market. Euro set off trading at Rs.101/06, gave major grounds and was changing hands at Rs.100/61 at close of markets on Monday. Thus, rupee ended the day on a positive note versus Eurozone’s shared currency.