Year End analysis comes true

It was analysed almost 6 months ago , discussed and shared that the USD/INR levels at year end will be at 44.50 levels. The same comes tru as the level touched 44.53 on 31st March 2011.Range for the wqas from 44.53 to 44.75.
Rupee appreciated further on account of fresh buying by FII and traded in the range of 44.53 to 44.75. Growth of GDP numbers and expected further growth , better IIP numbers supported.Year end target of 44.50 was close to 44.53. JPY is depriciating in line with the assesment and is no at 83.66 levels. Markets though are closed on 1st April.It has actually started depreciating at a faster rate. Lackof arbitrage opportunities and appreciating ruppee reduces the opportunities for the dealers and hence lesser number of trades. Euro gained and is at close to 1.42 levels. Call saw greater range of 5.7 to 9.5% and finally settling at 8.8% which is on account of banks not forthcoming to lend and most of the deals were for 5 days.
Government securities volumes were lower and debt trading volumes was close to 1000 crs. expected to be more on account of year end adjustments and depending on the advances size of the book. Positive leads from domestic stock market gains amid FII inflows were offset by dollar gains overseas and month-end dollar demand, according to traders. Forward premia slipped despite lower spot USDINR quotes. Traders kept a watch on liquidity conditions

More than One lakh crore was under borrowering from RBI through Repo and due to Rs10000 cr of borrowing in the 1st week of April 2011, yields have remianed tight. Liquidity situation in the market has not improved but the equillibrium has been achived as the Call and GSec yields have not moved much.All asian Indices opened higher and and all major indices are up.

Gold and Silver moved up further up with Gold at 1433 levels up from 1417 levels just couple of days back. it is heard that asian countries and even Korea was in the market to buy Gold whereas couple of months they were the sellers.Crude has moved in the range and will getting the support at lower levels and to flare further making the Asian currencies further depreciate and bullion improve. There has been more than 1b usd of investment by FII in last 3 days of the March , which is more than a complete month.

Inflation is expected to go down though food inflation is up to 10.5% an increase after three weeks of downward trend. Forex reserves are consistently growing and are stable. We can expect further tightening of the liquidity by another 50 basis points in two trenches. China is also further tightening the liquidity. Reduced IIP number in Jan -Mar quarter is of worry and is a reflection of the softening of the demand side economics.February is up from 3.7 to 11.75% bucking trend.