Tuesday, April 5, 2011

Rupee to gain on firm Asian peer

The Indian rupee appreciated v/s the US dollar on Thursday last week with the March
USDINR contract closed down 20 paisa at 44.75. Today, the pair has opened lower after
two days holiday supported by firm local shares and Asian peer. The rupiah hit a fresh 4-
year high against the US dollar and strengthened to as much as 1,184.0 per dollar recently
to support the rupee appreciation.
Asian currencies have enjoyed solid gains recently as foreign investors resumed buying
stocks in Asia and other riskier assets. The rupee has been moderately weaker compared
to other Asian currencies. The rupee has gained a mere 0.4 % against the dollar so far this
year on worries about the country's current account deficits amid higher oil prices, while
the won and the rupiah have jumped 4 %. Today, the USDINR is expected to trade weaker
on firm Asian stocks.
In case of Euro, the market focus is on ECB meeting due on 7th April, 2011. The European
Central Bank is expected to raise interest rates by a quarter point from a record low of 1 %
at its meeting on Thursday to rein in inflationary pressures, with two more 25 basis point
hikes priced in by the year-end. The EU PPI data is expected today which is likely to show
YoY producer prices grew 6.7%.
In case of pound, the weak economic data is expected to put pressure on cable coupled
with high inflation. BoE is still not in the favour of rate hike on weak growth. UK GDP in
the 4th quarter fell 0.5%.

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