Currency speculation in India's Rupee FX markets returned with RBI curbs lifted in January resulting in daily Fx turnover of INR 2.5 Tln, and its negative impact on liquidity erased after RBI curbs put Rupee spot on cash only basis and Forward rebooking and client wise limits of banks were curtailed. However Open market operations had to be conducted, 10 year yields still at a high of nearly 8.4% in today's bond markets, showing the unseemly consitution of the markets after ONGC needed a last minute repair onto INR 50 bln worth of LIC and SBI intervention

It is thus likely that either yields track for double digit or Rupee track to 60 in bad budget reports/expectations and the best budget statement a rescue for the Rupee to 50 t o the Dollar and sub 9% yields for 2012 at the very best

Posted via email from The India Investment Post