TODAY’S FOREX REPORT 22/july/2013

MARKET HEADLINES

Rupee seen stuck in tight band, fresh cues awaited

The rupee is stuck in a tight band, trading marginally weaker on the day at 59.40/41 versus its previous close of 59.35/36 on the back of some demand from importers but volumes low.

Traders say the market awaiting clarity from policymakers following RBI’s last week’s measures to restrict rupee liquidity and raising of short-term funding interest rates.

The pair expected to hold in a 59.30 to 59.60 band during the rest of the session.

Yen rises in choppy trade after Japan PM’s election win

The yen rose on Monday in choppy trading, having dipped initially after a big win by Japanese Prime Minister Shinzo Abe’s ruling bloc in upper house elections gave Abe a stronger mandate for his reflationary economic policies.

The dollar lost steam after that, however, and later saw a sharp reversal, falling to as low as 99.60 yen. The dollar last stood at 99.92 yen, down 0.6 per cent from late US trade on Friday.

Yuan firms slightly on 8th anniversary of revaluation

The yuan strengthened slightly in morning trade on Monday, the eighth anniversary of the currency’s revaluation, but the exchange rate remained well within its 1 per cent daily trading band.

There was no significant reaction in the currency or money markets to the government’s decision on Friday to scrap the floor on commercial bank lending rates.

Spot yuan traded at 6.1369 versus the dollar at midday, up from 6.1379 at Friday’s close.

The People’s Bank of China (PBOC) fixed the official daily midpoint at 6.1721 on Monday morning, with the yuan strengthening from 6.1751 at Friday’s fix.

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