Weekining of rupee and analysis,

Y value is increased decreased against dollar,

Reasons
Analysis
























Rupee weakens to 55.90/$ on dollar demand




The Indian rupee fell against the dollar on Monday to 55.90 to the dollar on account of a rise
in demand for dollar due to weakness in the euro.

At 1.30 p.m., the rupee was at 55.75 to the dollar, down 14 paise or 0.25 per cent down from
Fridays close. It had opened stronger for the third straight session on Monday, buoyed by the
surge in regional stocks after European leaders agreed to shore up the region's troubled banks.
After rising over 2 per cent, the Indian currency had closed at 55.60 to the dollar on Friday, in
what was its largest gain in three years on account of GAAR clarification and EU deal.

Euro dipped on Monday, giving up a bit of ground after its biggest one-day climb in eight
months, as investors look for fresh reasons to extend a rally sparked by initial euphoria over
the latest European push to ease the region's debt crisis.



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Rupee at 55.61 to dollar; biggest daily gain in three years
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Rupee flat, but stays below 57-mark against dollar
Rupee falls to 57.11 to dollar, RBI intervention watched
Rupee closes with marginal gains at 57.01/$ as RBI disappoints
Traders however say volumes are much lower due to quarterly closing of RBI accounts,
leading to higher volatility in the market.

The RBI has intervened repeatedly after the currency resumed declines to record lows against
the dollar, mirroring declines in May. The currency hit its lowest ever at 57.33 on Friday.

The rupee has earlier failed to gain traction despite measures announced by the central bank
on India to bolster the currency, including raising the investment limits on government bonds
for foreign investors. It had also asked oil companies to get 50 per cent of their dollar needs
from state-owned banks.

The country too has been besieged with concerns over slowing growth, rising inflation and
poor investor sentiment. While GDP slowed to 5.3 per cent in the fourth quarter of FY12,
inflation has been persistently over comfortable levels. Credit rating agencies Fitch and S&P
too warned about a paralysis in policy making affecting the country.

The domestic worries, compiled with global risk aversion on account of the Euro crisis have
been weighing on the rupee, which has fallen close to 7 per cent this year, making it the worst
performing currency.
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Rupee weakens further against dollar; down 48 paise

The Indian Rupee weakened further on Tuesday against the US dollar and hit an intraday
high of 55.88/$. It retraced gains from the past three days to end at 55.67/$ as weakness in the
euro continued to fuel worries over the outlook for the euro zone.

The rupee had closed higher on Monday supported by a stronger Euro as global risk assets
stabilised.

Indian equity markets too witnesses choppy traded on Tuesday; but it failed to improve rupee
trade. Both BSE Sensex and NSE Nifty ended flat. The Sensex rose 21.74 or 0.13% to
16,438.58, while the Nifty index closed 4.45 points higher at 4,990. The Sensex closed over
100 points lower than the day's high of 16,554. Nifty's failure to hold on to the 5,000 mark is
an indication of weakness.

Oil companies and corporates were seen buying the greenback, dealers said. Dollar demand
from oil firms usually peaks towards the end of each month, as they need to pay their import
commitments. Traders were also spotting bunched up outgoing corporate dollar remittances
because Monday was a U.S. public holiday.

According to market expert Lancelot D'Cunha, CEO, Sharyans Wealth Management, Rupee
could weaken again going forward. However, Pankaj Pandey, Head - Research,
ICICIDirect.com, expects a correction in oil prices to ease pressure on the rupee.

RELATED STORIES
Rupee weakens to 55.90/$ on dollar demand
Rupee at 55.61 to dollar; biggest daily gain in three years
Rupee at 8 day-high of 55.79 against dollar on EU agreement, GAAR
Rupee flat, but stays below 57-mark against dollar
Rupee falls to 57.11 to dollar, RBI intervention watched
Meanwhile, Moody's said that significant depreciation of the Indian rupee is insignificant for
India's sovereign credit. "Government foreign currency debt comprises only 7 per cent of
total government debt and 5% of GDP. Most of it is owed to multilateral and bilateral
creditors and has a maturity profile that keeps annual foreign currency repayments relatively
low. Therefore, the direct effect of depreciation on the governments own debt repayment
capacity is limited," Moody's said in a report.

The rupee has been depreciating to new lifetime lows on increased dollar demand from
importers, especially oil refiners coupled with capital outflows from foreign funds. Even
selling of the American currency by exporters and banks failed to check persistent fall.

Dollar has been appreciating against a basket of currencies worldover. Dollar Index has hit a
20 month high in trade, while Euro has been depreciating, down over 5 per cent this month
against the US dollar and Yen.

According to Standard Chartered, Rupee may drag to 58.60 levels against the dollar on
account of technical weakness. Morgan Stanley, however, expects rupee to cross levels of 60
and touch 62.70/$.

Meanwhile, Finance Minister Pranab Mukherjee said last week he is disappointed to see that
the fluctuation of the Rupee against the dollar is increasing. "Sensex and Nifty figures are
also disappointing. Brent crude price has also moved up, and the quantum of Indias imports
is quite substantial, around $160 170 bn," he said.

He ascribed the rupee's precipitous slide over the past six days to the euro zone crisis and to
the global slowdown, adding that the Indian stock markets as well as economic growth have
been hit by the slowdown.

The rupee has now fallen more than 5 per cent this year against the dollar to make it the
worst-performing Asian currency monitored daily by Reuters. It has dropped more than 13
per cent from its 2012 high reached in February










Why is Indian rupee weakening?
This is a very important question in this current scenario. Not even Indian currency, all
the Asian currencies are going down. They have started to doubt their strength.

What is the reason behind this? This is like a very talked about question. If, we try to
find, we can easily find lots of reasons will come out.

If we compare the rupee with dollar it has come down at their 2 year low. The declining
rupee is affecting the economy. Indian companies are losing huge chunks
money. Many companies have recorded mark to market losses running on their foreign
currency liabilities.

Indian reserve bank of India has started to sell dollars but it is not making any
difference. Demand of dollar is so high that it is not easy to control their appreciation.
Oil companies have to make their payment in dollars. They are making huge
demand of dollar.

Leave this all these things; Reserve / central bank has no command over declining
prices of rupee. The rupees saw their biggest fall in a decade on 16th September. It
reached around 47 levels. It was the biggest single day fall in a decade.

The impact of weakening rupee share market is also in turbulence. Investors have
started to think on strength of the economy.

When this weakness will come to an end, it is not very clear. But this is not an
indication of a strong economy. People are in hope that it will take some time to be
settled down.

If we will see the reality of whole economy, then we can understand the problem. The
kind of volatility is being seen everywhere, means recession has come.












As rupee falls, IT companies under pressure to cut prices
Mini Joseph Tejaswi, TNN Jun 29, 2012, 03.44AM IST


BANGALORE: Indian IT companies are coming under pressure from clients to renegotiate
rates downwards for older projects and drop rates for new ones, given the gains that the
vendors are making from the sharp drop in the rupee value against the dollar.
Contract values are typically in dollars and those that were signed when the rupee was at, say,
45 to the dollar in August last year, would today deliver 26% higher revenues in rupees to
Indian vendors, given that the rupee has fallen to that extent since then.

"Many global tech buyers are watching the day-to-day drop in the Indian rupee. Some already
have asked for a 'cut' from the rupee windfall," said the CFO of a leading IT company who
did not want to be named because his company is in the silent period ahead of its June quarter
results. He said it would be tough for IT companies to resist such demands. "Some IT
companies may be willing to share a part of the gains," he said.
The CEO of a mid-sized IT firm said the buyers were asking for a share in the rupee gains
because many of them were in deep trouble themselves on account of the
slowdown/recession in Western markets. "If we don't give them a cut, they may not renew the
contract or move to another vendor,'' he said.
Analysts also believe customers would put pressure on tech vendors to drop prices and
renegotiate contracts. Pradeep Udhas, executive director in consultancy firm KPMG, says this
could pose a new challenge for tech firms. But he also says many of the vendors may be able
to resist this demand by pinning their arguments on inflation.
Inflation in India has for long been close to double digits, leading to all-round increase in
costs, including for the IT vendors for whom much of the costs are in rupees. So the benefit
from the rupee fall would be reduced to that extent, and the profit gains would not be as
significant as the revenue gains.
Hari Rajagopalachari, leader for the technology sector in consultancy firm PwC India, says
the fundamental reason for the fall in the rupee is hyperinflation in India. "So the advantage
we get from rupee depreciation will get neutralized in high inflation. Indian tech providers
may well argue their case of inflation if they are asked to share their profitability with
clients," he says.





India rupee touches new low vs dollar
New Delhi/Agencies
The Indian rupee touched a record low of 57.33
against the dollar in trading yesterday, amid global
risk aversion and rising demand for dollars.
The rupee opened the day at 56.80 to the dollar
and plunged to an all-time low of 57.33 in
afternoon trading.
It recovered marginally to close at 57.12, down
1.47% from Thursdays close of 56.30 to the
dollar.
Analysts said increased capital outflows from
equity markets and the rising demand for dollars
from oil and gold importers were pulling down the
Indian currency.
Analysts and traders expect the domestic unit to hover around the level of Rs57-58 to the dollar
throughout June amid signs of uncertainty in Indias fiscal and economic outlook, and renewed global
risk aversion, the NDTV Profit channel reported.
Reserve Bank of India Governor D Subbarao had said on Tuesday that the central bank would
intervene in case of volatility in the foreign exchange market.
The rupee has been falling for much of the year, after spending most of 2011 at between Rs44 and 45
to the dollar. It fell to Rs53 in December, before gaining strength to around Rs49 in February.
Since then, it has plumbed ever lower depths against the dollar, with sharper declines since May. It
has depreciated more than 10% since the start of April.
In a bid to curb the currencys freefall, Indias oil secretary said the central bank had asked oil
companies to buy half of their dollar demand from public sector banks, the Press Trust of India news
agency reported.
The rupee has been one of the hardest-hit currencies in Asia, reflecting investor concerns about
Indias economy, which is being buffeted by high inflation and slow growth.
The economy grew just 5.3% in January to March, its slowest quarterly expansion in nine years.
The latest downward spiral in the rupee came after Moodys on Thursday downgraded the credit
ratings of 15 of the worlds largest financial institutions, including Goldman Sachs and Barclays, citing
risk exposure and the eurozone crisis.
Risk appetite is reducing at a very fast pace, said D K Joshi, chief economist with ratings agency
Crisil.
The rupee trend will reverse once things stabilise in advanced countries, he said. At these levels
the Indian market will start looking quite attractive.
The rupee also faced a string of unprecedented lows last month, highlighting the economic drift in the
once-booming Asian giant, which is also suffering from troublesome fiscal and current account deficits
and a stalled reform agenda.
New tax policies seen as hostile to foreign investment have added to the gloomy climate.

The Indian rupee feII to its Iowest ever against the doIIar
yesterday
Ratings agency Standard & Poors warned this month that India could be the first of the Brics
emerging economies which also includes Brazil, Russia, China and South Africa to lose its
investment-grade debt classification unless it revived growth and rekindled its reform programme.
Fitch Ratings also downgraded Indias credit outlook from stable to negative on Monday, saying the
countrys growth potential will deteriorate without a quickening of structural reforms.
Meanwhile, Indian equities retreated for the first time in four days after the rupees record fall and after
reports showed the US economic recovery is slowing. The Sensex has dropped 8% from its Feb. 21
high.
The S&P CNX Nifty Index on the National Stock Exchange decreased 0.4% to 5,146.05 and its June
futures settled at 5,151.15. India VIX, a gauge of options prices in the Nifty, jumped 3.2% to 20.58, its
first advance in six days. The BSE-200 Index retreated 0.3% to 2,082.68. Combined trading volume
on Indias top two exchanges was 749mn shares on Thursday, 17% less than the 12-month daily
average of 904mn.
The economy is going to struggle over the next six to nine months because growth and the deficits
are a concern as the rupee continues to weaken, Jyotivardhan Jaipuria, head of India research at
Bank of America Corp, said in an interview to Bloomberg UTV yesterday.
Rupee depreciation is not something you want if you are a foreign investor because it reduces your
return in a market where returns are difficult to come by.