Foreign exchange

Definition:
The foreign exchange (currency or forex or FX) market exists
wherever one currency is traded for another. It is the largest and most
liquid financial market in the world, and includes trading between
large banks, central banks, currency speculators, multinational
corporations, governments, and other financial markets and
institutions.

Things happened in forex in last week:

In July 15, 2008
Rupee declines
The rupee depreciated by 30 paise against the dollar on Tueday due to
Fitch Ratings downgrade of the local currency and the huge losses in
the stock market. The domestic unit opened at 42.98 and touched an
intra day low of 43.28/29. It closed at 43.22/23, against the previous
close of 42.92/93.

In July 18, 2008

Rupee gains due to easing of oil prices
The rupee appreciated against the US dollar on Friday, for the third
day in a row, thanks to the easing of crude oil prices in the global
market and gains made by the domestic equity market. The currency
opened higher at 42.71/73 and closed at 42.75/76, against the previous
close of 42.81/82. During the day, it moved in a range of 20 paise.
Forex reserves up $123 m on revaluation

The foreign exchange reserves rose by $123 million to $308.520

billion for the week ended July 11, according to the figures released
by Reserve Bank of India’s Weekly Statistical Supplement.

In the preceding week, the reserves had fallen by $3.393 billion to

$308.397 billion.

Foreign currency assets increased by $125 million to $298.786 billion

during the week under consideration. Foreign currency assets
expressed in US dollar terms include the effect of an appreciation or
depreciation of non-US currencies.

Gold and special drawing rights remained unchanged at $9.208 billion

and $11 million, respectively. The reserve position in the International
Monetary Fund fell by $2 million to $515million

In July 19, 2008

Forex reserves management
One read “RBI moves forex assets to ‘safer’ avenues” (Business Line,
July 19) with some satisfaction and an equal amount of concern. It
looks as though there was some improvement in the return from
foreign currency assets and gold during 2006-07 (4.6 per cent) over
the previous year (3.9 per cent).
In July 21, 2008

Rupee gains 15 paise

The rupee appreciated by 15 paise against the dollar on a day that

witnessed relatively thin trading volumes. The domestic currency
opened higher at 42.66/68 and touched an intra-day low of 42.77/78.
It closed at 42.67/68, against the previous close of 42.81/82. The
markets are very cautious due to the political uncertainty and hence
the low trading volumes, said a dealer with a private bank. The rupee
gained due to the upswing in the stock market and low oil prices,
added the dealer.

In July 22, 2008

Rupee falls:
MUMBAI: The rupee fell on the opening on Tuesday. The Indian
currency was quoting at Rs 42.75/76 a dollar compared with
yesterday’s close of Rs 42.68/69 a dollar.

The reason for the weakness of the currency according to analysts is

the vote of confidence that is to be held today and dealers preferred to
await the outcome.