Rupee dampened by dollar demand

Opening at 46.23, the rupee showed signs of strength against the dollar. It fell further with rise in dollar demand by the corporates. The oil price hike has more than dampened the positive sentiment generated by the dismal US payrolls data and the expected dollar inflow on account of TCS.

The interest rate to be announced by the FOMC tomorrow will determine the market direction. After US reported a dismal growth in jobs since December, it is expected that the Federal Reserve will refrain from hiking the rates further. The unemployment rate stands at 5.6 per cent falling from 5.5 per cent for the previous year. The bias has shifted from US for now. A significant rate hike is not expected also until after the forthcoming election between President George W. Bush and Democrat John Kerry.

Yen bounced to 110.70 levels but its rise was marred by the surge in oil prices and also the negative sentiment in the Nikkei. Now the Yen is ranging in 110.50 to 110.70 levels. The Bank of Japan is expected to keep a steady monetary policy in order to not cause any more fluctuations.

Euro touched a high of 1.2280 and now retraced to 1.2263, 1.2250 being a strong support level. The European economy has grown on the whole led by the German growth despite the dismal performance of France and Italy. US reports have given it more impetus to surge though oil is a major concern.