Broad run presaged for local unit
The rupee is likely to trade in a broad range of 46.60-80 per dollar this week.
The market will watch out for any unknown element that could creep up even as the war in Iraq progress and also month-end and year demand for the dollar. The rupee had closed on Friday at 47.67/68 after opening at 47.75/76 against the dollar.
The local unit had on March 20 on intra-day day trades touched 47.83/84 levels in the week on demand from two power distribution companies of around $70 million.
However, state-owned banks cooled the markets by selling dollars and the rupee closed at 47.73/74.
Public sector banks had been both buying and selling dollars in the market the last week. If the rupee touches 47.75, dealers expect some selling to come in which would cool off the rupee.
However, as and when rupee appreciates above the 47.65 level mark, demand is likely to firm up.
Also with oil prices falling below the $25 mark per barrel, dealers expect the oil companies to enter the market if rupee appreciates against the dollar.
The inflows into the market have also dropped. If there is any major demand from public sector units, as was seen last week, the rupee could depreciate.However dealers are following the wait and watch policy. If there is any indication that the war would prolong, then the markets would be adversely affected.
According to dealers if Baghdad is not captured in four days, then the market is likely to factor in that it would be prolonged war. The oil prices could also start increasing in this case. The market is also wary on the unknown elements
