FOREX REPORT FOR 13 OCTOBER 2014

MARKET HEADLINES

Rupee down 15 paise against dollar in early trade
The rupee fell by 15 paise to 61.20 against the dollar in early trade today due to fresh demand for the US currency from banks and importers amid a weak opening in local equities. Dealers said besides increased demand for the American currency from importers, the dollar's strength against other Asian currencies overseas, put pressure on the local unit. The rupee had gained 35 paise to close at over one-week high of 61.05 against the dollar yesterday on persistent selling of the US currency by exporters and some banks amid a surge in local equities. Meanwhile, the benchmark BSE Sensex fell by 256.81 points, or 0.96 per cent, to 26,380.47 in early trade today.
 
China's yuan slips ahead of likely weak data
China's yuan slipped on Friday as investors consolidated gains in a holiday- shortened week ahead of a raft of data next week which will provide clues on the extent of the slowdown in the economy. Softer domestic demand probably pulled down growth in China's imports, investment and retail sales to multi-month or multi-year lows in September, raising questions about whether policymakers should do more to stimulate activity. "We expect below-consensus readings for all of these indicators, which would re-ignite growth concerns and exert some downward pressure on the yuan," said Dariusz Kowalczyk, a strategist at Credit Agricole in a daily note. A weak midpoint fixing by China's central bank also prompted some traders to take profits after recent gains on concerns about waning global growth. The People's Bank of China set the midpoint rate at 6.1470 per dollar prior to market open, slightly weaker than the previous fix. The spot rate is currently allowed to trade 2 per cent above or below the midpoint. The spot market opened at 6.1300 per dollar, slightly stronger than Thursday's close but weakened to 6.1333 in late morning trades. Concerns about weak Chinese data also weighed on the offshore yuan market where the currency weakened after posting strong gains this week. As a result, the gap between the offshore and the onshore yuan narrowed substantially to below 80 pips from a high of nearly 400 pips seen at end September when pro-democracy protests intensified in Hong Kong. A Reuters poll released on Thursday showed sentiment toward the yuan in the last two weeks remained bullish as the People's Bank of China was generally setting official guidance rates at stronger levels. Still, long positions in the currency declined to their smallest since mid-July.

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