DAILY FOREX REPORT 24/june/2014

MARKET HEADLINES

• Rupee trims initial gains; trades lower against US dollar  
  The rupee trimmed its early gains to hit day's low of 60.27 in trade today due to uneven demand and supply of the US currency from banks. The local currency resumed higher at 60.10 per dollar as against the last weekend's level of 60.18 at Interbank Foreign Exchange ( Forex) market on initial selling of dollars by banks and exporters in view of recovery in the equity market. However, it failed to maintain initial gainson some demand for the American currency from banks. Crude oil prices edged higher in Asian today on continued violence in Iraq, but gains were capped as the risk premium associated with the crisis in the key crude producer is already factored in, analysts said. The US benchmark West Texas Intermediate was up 31 cents to USD 107.14. In New York market, the dollar rebounded on Friday, but posted weekly losses against most major rivals after the Fed signalled this week it was likely to keep interest rates low for a while.
• China's yuan rises for 2nd day on stronger midpoint, improved sentiment 
    China's yuan rose modestly against the dollar for the second day on Friday, buoyed by a marginally stronger central bank midpoint and improved sentiment after the currency's recent rebound, traders said. Spot yuan stood at 6.2286 per dollar at midday, up 0.02 per cent from Thursday's close, after the central bank fixed its midpoint at 6.1524, up 0.01 per cent from Thursday. The yuan has rebounded 0.5 per cent since the end of April after slumping 3.3 per cent in the first four months of this year as the People's Bank of China (PBOC) engineered a depreciation of the currency to deter speculators betting on non-stop yuan appreciation. More recently, however, the PBOC has fixed its midpoint generally stronger to signal that it may feel the depreciation earlier in the year was enough to deter punters, traders said. China's healthy export growth in May, which resulted in the country's biggest trade surplus in five years, also offered the central bank an easy excuse to let the yuan's depreciation take a pause, traders said. A Reuters poll of 11 currency analysts showed sentiment on the yuan turned bullish for the first time in four months, fueled by a change of the PBOC's tactics. Still, traders said the PBOC's recent midpoints have not sent signs that it is guiding yuan to resume appreciation. For instance, the central bank set three sharply lower midpoints in the first three days of this week as it moved to dampen speculation that it would allow the yuan to resume appreciation after the currency staged its biggest weekly rise of 0.6 per cent since late 2011 last week .
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