Finally some relief for the Dollar vs the Rupee

Finally some relief for the Dollar vs the Rupee.
Despite resuming on a strong note on the back of good FII investment in the public offering of the largest private sector bank ICICI Bank, the rupee declined by four paise to 40.80/81 against the US currency, snapping three-session winning streak.

In quiet trade at the Interbank Foreign Exchange (Forex) market, the Indian unit opened strong at 40.70/72 a dollar from Monday's close of 40.77/78 per dollar.

It later touched a high of 40.69 a dollar following firm equity market and oversubscription of ICICI's follow-on public offer within an hour of opening on Tuesday.

Strong equity market, where the benchmark Sensex closed up by 215 points, aided the rupee sentiment in early trade.

However, dollar buying by oil refinery companies to meet their import requirements in lieu of spiralling global crude oil prices forced the rupee to close lower at 40.80/81 a dollar.

Light, sweet crude for July delivery remained near $ 69 a barrel in Asian electronic trading on the New York Mercantile Exchange, mid-morning in Singapore.

Initially, fresh dollar demand from importers boosted the rupee sentiments, forex dealers said adding "the currency also drew support from expectations of heavy capital inflow, mainly through the equity market route."

There was not much intervention by the Reserve Bank to cap the rupee's surge. The RBI fixed the reference rate for dollar at Rs 40.70 per dollar and for the single European unit at Rs 54.65 per euro.

The rupee premiums on forward dollar ended further lower due to sustained receiving by exporters. Benchmark six-month forward dollar premiums payable in November ended at 49-51 paise, down from 53-55 paise on Monday and the far-forwards maturing in May closed lower at 104-106 paise from 107-109 paise previously.

In cross-currency trades, the rupee moved down further against the British sterling, while closed fractionally up against the euro.

The Indian unit dropped further against the sterling to Rs 81.03/05 from overnight close of Rs 80.81/83 per pound while ended slightly higher against the single European currency at Rs 54.66/68 per euro from Rs 54.68/70 per euro previously.

The rupee, however, held steady against the Japanese yen to close at Rs 33.03/05 per 100 yen.

rupee	4548
dvd rupee	674
indian rupee	621
rupee exchange rate	250
rupee tempted to touch	200
dollar rupee exchange rate	197
indian rupee exchange rate	178
dollar rupee	177
dollar to rupee conversion	167
india rupee	136
rupee tempted to touch lyric	125
rupee lyric	113
afghani afghani money old rupee	81
rupee conversion	80
conversion dollar rate rupee	71
convert dollar to rupee	70
rupee dollar exchange	66
pakistan rupee	66
rupee ft daddy yankee tempted to touch remix	65
dollar indian rupee	57
rupee exchange	57
indian rupee rate	54
room rupee	44
indian rupee to us dollar	42
dollar to rupee rate	41
one rupee	39

Risk Diversification
The majority of Indian corporates have at least 80% of their foreign exchange transactions in US Dollars. This is wholly unacceptable from the point of view of prudent Risk Management. "Don't put all your eggs in one basket" is the essence of Risk Diversification, one of the cornerstones of prudent Risk Management

Disadvantages of $-Rupee	Advantages of Major currencies
1. The very nature or structure of the $-Rupee market can be harmful because it is small, thin and illiquid. Thus, dealer spreads are quite wide and in times of volatility, the price can move in large gaps	1.By diversifying into a more liquid market, such as Euro-Dollar, the risk arising from the Structure of the Indian Rupee Market can be hedged
2.Impacted in full by the Trend of the market. For instance, if the Rupee is depreciating, its impact will be felt in full by an Importer	2.Trends in one currency can be hedged by offsetting trends in another currency. Refer to graphs and calculations below.
3.Dollar-Rupee, in particular, brings the following risks: 1) Lack of Flexibility...Payables once covered cannot be cancelled and rebooked 2) Unpredictability...Dollar-Rupee is not a freely traded currency and hence extremely difficult to predict. The normal tools of currency forecasting, such as Technical Analysis are best suited to freely traded markets 3) Lack of Information...Price information on Dollar-Rupee is not freely available to all market participants. Only subscribers to expensive "quote services" can get accurate information	3.These constraints do not apply in the case of the Major currencies: 1) Flexibility...Hedge contracts in Euro-Dollar or Dollar-Yen etc. can be entered into and squared off as many times as required 2) Predictability...the Majors are much more predictable and liquid than Dollar-Rupee and hence Entry-Exit-Stop Loss can be planned with ease, accuracy and effectiveness 3) Free Information...The Internet provides LIVE and FREE prices on these currencies.