The Indian rupee came under immense pressure on Monday, December 20, in line with the regional peers as the US dollar registered a strong rebound against the major international currencies, extending its previous gains. Rupee started lower by around 24 paise at Rs. 45.60 against the greenback and edged further down to touch the day's low at 45.66 so far during the day. However, some marginal losses in the US dollar helped the domestic currency come off its intra day lows registered so far and advanced to hit the day's high at 45.47. In the spot currency market, the local unit was last seen trading at around 45.50 at 10.30 AM IST, lower by 14 paise or 0.31% as compared to previous close at 45.36. The domestic equity indices edged lower in early trade as Asian stocks fell on geopolitical in tension in the Korean peninsula and on continued worries over Europe's sovereign debt woes. Trading in US index futures indicated that the Dow could fall 31 points at the opening bell on Monday, 20 December 2010. On the domestic front, the Reserve Bank of India (RBI) on Thursday, 16 December 2010 announced measures to ease liquidity crunch in the banking system while keeping the key policy rates unchanged after a mid-quarter policy review. The RBI reduced the statutory liquidity ratio (SLR) of scheduled commercial banks (SCBs) from 25% of net demand and time liabilities (NDTL) to 24%, with effect from 18 December 2010 to ease the liquidity crunch situation in the system. The European unit slid against the greenback to a two week low on the first trading day of the week on concerns that Europe's debt crisis will spread. Meanwhile, speculation that North Korea will retaliate to artillery drills by its neighbor also boosted demand for safer haven dollar. The dollar also strengthened against the euro on expectations of accelerated US economic growth reports this week. The greenback advanced above the 1.3200 levels and is currently quoting at around 1.3151 versus the euro. The US dollar index, which tracks the greenback against a trade-weighted basket of six major currencies, is up by 0.19% at 80.53. Most Asian currencies were weaker against the dollar on Monday. The Indonesian Rupiah down by 0.15% at 9047.50, the South Korean won by 1.28% at 1167.32 and the Taiwan dollar down around 0.22% at 29.92 against the US dollar. In the domestic bond market, early today, the yield on 10 year benchmark 7.80 GS 2020 federal paper on Monday was at 7.96% higher by 2 bps as compared to 7.94% as on Thursday. Yield on the federal paper 7.99 GS 2017 was at 7.87%, flat against previous closing. Meanwhile, the yield on another widely traded federal paper 8.13 GS 2022 was at around 7.99%, almost unchanged as compared to yesterday's close. In the domestic currency futures market on the NSE, the front month December USD/INR contract opened on Monday at 45.65 per dollar mark. The contract hit an intra day high at 45.72 and registered a low at around 45.53 so far during the day. Meanwhile, euro- rupee contract was at around 59.95, down by 0.29%, as against 60.13 registered in previous close. The JPY/INR contract was higher by 0.51% at 54.33 against 54.05 in the previous session. GBP/INR contract was at 70.65, down 0.37% as against 71.91 as registered at close on Thursday. At the time of writing, the NSE December USD/INR contract was at 45.55, higher by 13 paise or 0.28% compared to the previous close at 45.43. The rupee contract on the MCX was trading close to the NSE contract and was last seen at 45.57 as against 45.43 as on Thursday. Rupee on the contracts will likely find support at 45.48 for the day.

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