RBI stalls rupee''s fall
19 August 2004
intervention held the rupee from falling below 46.36
today after opening at the level. The foreign banks
demand for dollars has been sighted as the reason for
the downward pressure on the rupee. The RBI has successfully
contained the rupee's fall but the rupee still feels
the downward pull.
The oil prices are expected to rise higher. The Indian import bill will rise significantly with oil prices now touching $47 per barrel yesterday.
The dollar gained strength against most other currencies. The US economy is expected to perform better in the second half of the year and there are forecasts of a further rate hike. Hurricane Charley has taken a significant toll on Florida's economy. None of the Hurricane's negative effects have yet to be reflected in the US economic reports that we have seen to date. The Hurricane will not only cost insurance companies approximately 7 billion dollars, it will also hurt companies that may have uninsured inventory or equipment and sales in general. Tomorrow's Philadelphia Fed Factory Survey is also not expected to give any positive push to the dollar.
euro at 1.2366 continues to roll over in quiet trading.
The consumer prices decreased 0.2 per cent in July,
slowing the annual growth pace down to 2.3 percent from
2.4 percent as per the CPI of the Eurozone released
yesterday. Although GDP in France and Germany has improved,
the second quarter growth estimates indicate deterioration
in the Eurozone as a whole.
The yen at 109.45 soared against the dollar despite continued strength in the price of oil. Though the Japanese Q2 GDP report was not impressive, the GDP growth expected to increase to 3.5 per cent this year. Tomorrow's machinery orders report should reflect improved growth, as corporate profits remain healthy.
The British pound at 1.8300 slide against the US dollar. The much-awaited minutes from the Bank of England's August monetary policy meeting confirmed the central bank's unwillingness to raise its interest rates.