FOREX REPORT FOR 01 OCTOBER 2014

MARKET HEADLINES

Rupee slips to 61.71 against dollar after RBI policy review
Rupee slipped as low as 61.71 after the RBI policy review before retreating to trade at 61.59. The pair closed at 61.53/54 on Monday. The RBI kept its key policy repo rate unchanged at 8.0 per cent on Tuesday. The dollar is on track to post its biggest monthly gain in over a year. Asian currencies were trading mixed versus the dollar. Month-end demand from importers was seen aiding the pair.

Sterling falls to two-week low vs dollar, gains against euro
Sterling hit a two-week low against the dollar on Tuesday but improved to a more than two-year high against the euro, reflecting the latest leg of a broad-based rally for the US currency that now dates back almost three months. Dealers said Middle Eastern names had been seen buying and then selling the pound after a mixed bag of data confirmed the British economy expanded strongly in the second quarter but also showed the country's current account deficit continuing to grow. By 0919 GMT, sterling was 0.23 per cent lower against the dollar at $1.6203, having traded as low as $1.6198. It gained just over a third of a percent against the euro at 77.81 pence.

I want to reduce undue volatility in rupee: Raghuram Rajan
The Reserve Bank of India is not focussed on any particular level of exchange rate, but wants to reduce undue volatility, Governor Raghuram Rajan said after the policy review on Tuesday. He added such a policy would mean that the central would typically intervene on both sides of the exchange rate. The rupee has risen in recent months and in the process has maintained its parity with the dollar seen at the beginning of the year, Rajan told reporters in Mumbai. The rupee has gained 1.89 percent against the dollar in the month to date and 2.93 percent in the past six months, as per Thomson Reuters data.