Rupee hopes hinge on FII

The market is looking hopefully at the only positive news to come for now, the foreign funds inflow on account of Tata Consultancy Services' (TCS) public offering. Other than this everything is adding to gloom: rising inflation to 7.51, surging oil prices, poor economic reforms, depleting dollar reserves. TCS (a Tata company) is one of India's top software exporters. It raised Rs 5420 crore in the IPO which is the largest ever in India.

Today the rupee was quoted at 46.31 per dollar close to its previous close. RBI intervention is another determining factor that is keeping the rupee from depreciating and reflecting its true value at the moment.

The US budget deficit widened to $396 billion last month. On a monthly basis, the deficit increased by $69.2 billion. Revenues increased 8.8 per cent, while spending increased 15 per cent. More specifically, military costs accounted for the biggest dollar increase in spending. US Treasury auction received moderate demand - the government needs to continue to sell debt in order to fund the deficit.

As expected, the euro extended yesterday's losses against the dollar.

Surprisingly, the Bank of England signalled that their tightening cycle could be coming to an end. The central bank has raised rates by 125bp indicating the economy is being slowed down. There are expectations of one or two more rate hikes soon. The sterling is currently ranging around 1.8310 levels.

The yen, now at 110.80 per dollar is falling. Japan's trade surplus increased while the current account surplus surged 31.9 per cent to a record high of ¥9.64 trillion. Mainly attributed to falling Japanese exports to the US.