A cliff of expectations hit RBI and MoF announcements of new plans to eaase dollar flows into the country and the Dollar is still climbing as if it was the end of the world in post CM trading till 5 pm
Infrastructure Funds lock in period has been reduced to a year and an additional $10 B in ECB approved. Also fund flows impacted are much larger than the EEFC discounts when last month the rupee begged RBI intervention.
The Euro is falling thru as the main reason for the Dollar index and as that should in fact lead to a Euro cross peg ont he US Dollar here the rupee could still be correcting in a few hours again. The changes were expected to be more far reaching including rumors of Resurgent India bonds and Millenium India Deposiuts and the set up was too easy for the nascent market to burn once the announcements were done.
Indian GSecs to the extent of an additional $5 B would shore up income in many bond funds globally as India ETFs get ready to mop up extra funds after the exodus till April 2012 the GSesc residual maturity has been reduced to three years
Apparently volumes of trades organise most of the Dollar flows though Exporter sales happened in the 56 range only again earlier today and again they are just waiting and watching as the Dollar makes rupee exports competitive
indian FX resevres continue at the $289 B level but with dolla r bulls having waited for all policy ammunition to be spend before riding back, the rupee correction may well take one more week across the Expiry on Wednesday and Thursday( Equities F&O)