FOREX REPORT FOR 04 AUGUST 2014

MARKET HEADLINES
 

Rupee falls 22 paise against dollar; lowest since April 25
The rupee lost 22 paise to over three-month low of 60.77 against the US dollar in early trade today at the Interbank Foreign Exchange market on increased capital outflows amidst demand for the American currency from importers. Besides, a weak trend in other currencies against the dollar overseas and a lower opening in the domestic equity market put pressure on the local unit, forex dealers said. The domestic currency had lost 49 paise to close at a three-month low of 60.55 yesterday on capital outflows after the US Fed trimmed its monthly bond buying programme by another USD 10 billion. Meanwhile, the benchmark BSE Sensex was down by 187.69 points, or 0.72 per cent, to 25,707.28 in early trade today.
 
Rupee slumps to 3-month low on dollar buying by state- runbanks
The Indian rupee slumped to a three-month low on Thursday, hurt by a rally in the dollar in global markets that helped spur state-run banks into buying greenbacks for corporate- and defence-related payments. The partially convertible rupee fell to as low as 60.57 per dollar at one point, its lowest since April 29, when the currency was in the midst of a rally in the lead-up to the general elections. The rupee declined 0.63 per cent in July, marking its second consecutive monthly fall, despite foreign investor buying shares and debt worth just over $6 billion, as per official data. Traders said the rupee had been hit by sustained gains in the dollar, which was trading at just below a 10-month high against a basket of major currencies. Dollar bulls had taken heart after a report showed the US economy rebounded sharply in the second quarter, although the Federal Reserve's affirmation of a broadly relaxed stance on the monetary policy tempered some of those gains. "The outlook for the dollar remains strong," said Anindya Banerjee, a currency analyst at Kotak Securities, a brokerage in Mumbai. "The fate of emerging market currencies will be decided by the fate of the dollar-carry trade and what happens to the interest rates in the United States." The rupee ended at 60.55/56 per dollar, down about 0.83 per cent for the day, its biggest single-day fall since June 13. Dealers cited heavy dollar buying from state-run banks, which they attributed to corporate-related needs as well as defense-related payments. The end of the month is also typically marked by dollar buying from importers looking to meet trade commitments. Shares also lagged, with the 50-share NSE index falling 0.9 per cent to 7,721.30 after earnings in some blue chips failed to impress investors.

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