TODAY FOREX REPORT UPDATES FOR 21 OCTOBER 2014

 MARKET HEADLINES
 

Rupee gains 25 paise against dollar in early trade
The rupee strengthened by 25 paise to 61.19 against the dollar in early trade at the Interbank Foreign Exchange today on increased selling of the US currency by exporters and banks amidst oil and gas reforms announced by the government. Forex dealers said besides increased selling of the American currency by exporters and banks, a higher opening of the domestic equity market also supported the rupee but the dollar's strength against other currencies overseas on upbeat data and earnings, limited the rise. In a major reform push, the government had on Saturday deregulated diesel prices. The domestic currency had bounced back by 39 paise to close at 61.44 against the dollar on Friday. Meanwhile, the benchmark BSE Sensex soared by 392.51 points, or 1.50 per cent, to 26,501.04 in opening trade today.

China's yuan eases, loses 0.1 per cent on week
China's yuan edged down slightly against dollar on Friday, pushed lower by corporate demand for dollars and after the central bank set a weaker midpoint, traders said. Spot yuan eased to 6.1246 per dollar by midday, 0.02 percent weaker than Thursday's close, after the People's Bank of China (PBOC) fixed its official midpoint at 6.1407, down 0.02 percent from Thursday's fix. For the week, the currency is set to drop 0.1 percent if it ends at the midday level. "Chinese companies and banks are more inclined to keep more dollars on hand of late due to concerns over China's economic outlook," said a trader at an Asian bank in Shanghai. China's trade performance posted a rebound in September, with both export and import data beating expectations. However, China's foreign exchange reserves fell slightly to $3.89 trillion at the end of September from $3.99 trillion at the end of June, central bank data showed on Thursday. Some analysts say the fall in reserves may have partly reflected some "hot money" outflows from China. "I need more evidence to decide whether there are outflows or not. But if the outflows are true, the authorities may take some measures to boost the yuan's value in the longer term," said a trader at a European bank in Shanghai. He said that views in the market were split over what direction the yuan would take. He also forecast the yuan will be relatively stable ahead of the Communist Party of China's fourth plenary session later this month.

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