Indian Rupee. Considering above factors, we expect Indian rupee to slouch against greenback.

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1 March 02, 2009 Indian Rupee The Indian rupee depreciated near about 3 per cent from the previous weeks closing with settling the week at levels. The rupee depreciated 22 percent versus the dollar in the past 12 months, the third-worst performance among Asia s 10most-used currencies. Indian rupee declined to a record low on concern global funds will sell of their funds of local assets after Standard & Poor s said it may cut the nation s credit rating to junk and economic growth slumped to a five-year low. Looking into policies of Indian economy, the continued policy setbacks on monetary, financial, and economic fronts is lowering India s medium-term growth prospects would result in a downgrade. The S&P rating agency currently rates India s long-term credit rating at BBB-, the lowest investment grade. A deepening global economic slump is eroding the ability of emerging-market economies to raise funds, causing current account and budget deficits to inflate as exports and economies shrink. India said this month its budget deficit will more than double to 6 percent of gross domestic product, as it borrows record amounts to finance stimulus measures to revive Asia s third-largest economy. Government borrowings are set to rise to 3.06 trillion rupees in the year ending March 31, from 1.56 trillion in the previous year. The rupee also fell on concern declining exports will widen the nation s current-account deficit, increasing demand for dollars to fund the shortfall. A rally in crude oil also added to speculation the current account gap will deepen. Crude oil has gained more than 14 percent this week on the New York Mercantile Exchange, heading for the biggest advance. India s central bank is trying to control its domestic unit by intervening in the currency market to smooth rupee movements, causing a decline in the nation s foreign-exchange reserves. Foreign-exchange reserves dropped to $249.5 billion this month, from a record $316.2 billion reached in May Taking forward market into consideration, the implied volatility of one-month dollar-rupee options have jumped to 15 per cent, which is a measure of expected swing in exchange rates, as part of option prices. The arbitrage difference between onshore and offshore market is widening which bets the spot rupee will depreciate further in the near term. Considering above factors, we expect Indian rupee to slouch against greenback. USD/INR The currency pair traded considerably higher in the last week and after making a high of it settled at levels. Market moved higher after breaking the previous life time high of levels. The increment has shown 2.82 per cent

2 from the previous weeks closing. The momentum indicator weekly RSI-14 is also supported the trend as it is moving around 0.67 levels. The indicator is expected to enter into the overbought territory in the near term. The next immediate resistance can be seen around and breach of the same it may also move to levels. Likewise, the supports can be seen at (previous swing high). IF market sustains above the support levels we may see market advancing for the whole week. EUR/USD The Spot euro traded lower against the greenback and witnessed a low of around $1.35% from the previous weeks closing with settling this week at $ levels. The currency traded lower as the US dollar gained in the last week against the all major currencies and more over US dollar index also rose and witnessed a high of levels. The dollar rose against the euro and most other major currencies on last week after latest reports showed euro zone inflation tumbled to a 10-year low and unemployment rate rose further. We have few economic data expected from both euro zone and US which would give a fresh direction to the currency. From the US front, unemployment rate data is expected which is likely to rise by 7.90% higher from the previous data stood at 7.60%. Moreover, non farm payrolls data is expected to decline by -650K and if the actual comes beyond -650K, we might expect dollar diminishing its value against other currencies. However, from the euro zone ECB is likely to announce its interest rates which might decline to 1.50%, previously at 2.00%. If the interest rate stays at expectations or declines then it gives a negative impact to the domestic currency and euro might depreciate in the short term. Moreover, we have PMI manufacturing and euro-zone 4QGDP which are likely to stay with consensus. Expectations of lowering interest rate and declining GDP data which is already in negative might depreciate the value of euro in the near term. The currency pair traded lower as after testing the 10- weeks EMA in the weekly it reverted lower and settled down at $ levels. The closing of the weekly candle shows prices to trade lower in the coming sessions and the next immediate supports can be seen around $1.2513

3 which is previous weeks low and breach of the same it may also test $ levels. Likewise, the resistances can be seen at previous weeks high and if market sustains below the resistance levels we may expect a further correction to the prices. The momentum indicator weekly RSI-14 is treading at 0.37 and likely to enter into oversold phase. Moreover, the currency pair had shown a smart recovery from $ to $ and since then it is correcting. We may expect prices may test the previous bottom levels in the near term. GBP/USD The British pound traded sideways to lower in the last week and settled at $ levels. The pound weakened as much as 1.4 percent to $1.4112, the lowest level since Feb. 18, and was at $ by 5:50 p.m. on Friday in London, leaving it 1 percent lower this week, and down 1.7 percent this month. The U.K. pound dropped against the dollar and the euro as consumer confidence held near the lowest level in three decades and stock markets around the world tumbled amid a deepening economic slump. The pound also fell as GfK NOP said more than 40 percent of British mortgage holders may see their loans exceed the value of their homes by year-end. Bank of England policy maker David Blanch flower said this week the recession will probably deepen significantly. The FTSE 350 Banks Index fell the most in more than five weeks in the last week as Lloyds Banking Group Plc said it hadn t reached agreement on a government asset-insurance plan. The recovery is likely to be pushed back and sterling can weaken further from here. It depreciated 0.9 percent to yen, paring its gain since the end of January to 7 percent. An index of U.K. consumer confidence rose two points to minus 35 in February, staying near a three-decade low. The survey of 2,001 people was conducted between Feb. 6 and Feb. 15. The pound slumped 23 percent versus the euro and 26 percent against the dollar in 2008 as the economy slipped into its first recession since The currency may trade between $1.41 and $1.50 in the next week. The pound is consolidating in the range of $ to $ for the past three weeks against US dollar and trading inside the range. Now, the crucial support is around $ and breach of the same it may test $ Only on break of the same it may move to $ levels. Similarly, the resistance is at $ levels. Since market is consolidating in the

4 range, break out of either direction would confirm the fresh trend. The RSI-14 weekly is treading at 0.37 levels. USD/JPY The yen posted its biggest monthly decline against the dollar since 1995 as Japan s export-driven economy crumbled, leaving the dollar as the sole refuge from global financial turmoil. The dollar rose to the highest level in almost three years against the currencies of six major U.S. trading partners as the deepening U.S. recession and the third government bailout of Citigroup Inc. stoked demand for safety. The yen slid 7.8 percent this month to per dollar, from at the end of January. Japan s currency declined 6.8percent to against the euro from The dollar appreciated 1.1 percent to $ per euro from $ The drop in the yen versus the dollar was the biggest since August 1995, when central banks bought the dollar and sold the yen to stem the U.S. currency s decline. Japan s currency touched per dollar on Feb. 26, the weakest since Nov. 10. Japan s trade deficit increased in January to the widest in two decades as exports slumped by 46 percent, the Finance Ministry said Feb. 25. A Cabinet Office report showed last week that the world s secondlargest economy shrank in the fourth quarter by the most since the 1974 oil shock. The indirect currency pair traded higher means Yen depreciated sharply against the green back and witnessed a fall of 4.2 per cent from the previous weeks closing with settling the week at levels. Market witnessed a high of levels. Technically, market traded higher as in the daily as well as in weekly price chart a double bottom pattern was seen which reversed the market to trade higher. Market breached the neckline at and since then it is trading higher. Moreover, prices are trading well above the short term moving averages suggesting an upward movement for the currency pair. Likewise, if market continues to trade higher we may find the next resistance at (50-weeks EMA). The supports are at levels. In the next week might see a mild correction and then upward movement for the currency pair.

5 WEEKLY QUOTES Majors EUR/USD GBP/USD CHF/USD USD/JPY AUD/USD CAD/USD Asia Pacific USD/INR USD/SGD USD/HKD USD/NZD USD/THB USD/IDR USD/KRW USD/TWD Latin American USD/MXN USD/VEB USD/CLP USD/BRL USD/ARS USD/COP USD/UYU European USD/KKK USD/NOK USD/SEK USD/ISK USD/RUB USD/CZK USD/PLN Africa USD/ZAR USD/EGP USD/KES USD/MUR USD/NGN USD/SDD

6 Upcoming Economic Events Date Time Region Event Period Survey Prior 03/02/ :25 GE PMI Manufacturing FEB F /02/ :30 EC PMI Manufacturing FEB F /02/ :30 EC Euro-Zone CPI Estimate (YoY) FEB 1.00% 1.20% 03/02/ :00 US Personal Income JAN -0.20% /02/ :00 US Personal Spending JAN 0.40% /02/ :00 US PCE Deflator (YoY) JAN 0.50% /02/ :00 US PCE Core (MoM) JAN 0.10% /02/ :00 US PCE Core (YoY) JAN 1.60% /02/ :30 US ISM Manufacturing FEB /03/ :30 GE Wholesale price Index (YoY) JAN -6.30% /03/ :30 GE Wholesale Price Index (MoM) JAN -2.00% /04/ :30 US ABC Consumer Confidence 2-Mar /04/ :30 CH PMI Manufacturing FEB /05/ :00 IN Wholesale Price Index YoY 21-Feb /05/ :30 GE Retail Sales (MoM) JAN 0.20% /05/ :30 GE Retail Sales (YoY) JAN -0.70% /05/ :30 EC Euro-Zone GDP s.a. (QoQ) 4Q P -1.50% /05/ :30 EC Euro-Zone GDP s.a. (YoY) 4Q P -1.20% /05/ :30 EC Euro-Zone Household Cons (QoQ) 4Q P -0.20% /05/ :30 EC Euro-Zone Gross Fix Cap (QoQ) 4Q P -2.80% /05/ :30 EC Euro-Zone Govt Expend (QoQ) 4Q P 0.30% /05/ :15 EC ECB Announces Interest Rates 5-Mar 1.50% /05/ :00 US Nonfarm Productivity 4Q 1.40% /05/ :00 US Unit Labor Costs 4Q 3.50% /05/ :00 US Initial Jobless Claims 1-Mar 650K /05/ :30 US Factory Orders JAN -3.50% /06/ :00 US Change in Nonfarm Payrolls FEB -650K /06/ :00 US Unemployment Rate FEB 7.90% /06/ :00 US Change in Manufact. Payrolls FEB -198K - -

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