TT (Telegraphic Transfer) buying rate indicates the rate at which bank convert foreign inward remittances to INR.

When an authorized dealer has already received the foreign currency in its account abroad, T.T. Buying rate is applied. This rate is applied by banks under the following situations: TT/MT/DD/Bankers cheque representing clean inward remittance Realisation proceeds of export bills sent on collection Cancellation TT/MT/DD/Bankers cheque issued by the banks in India Cancellation of forward sale contract

DATE
01 February 2012 02 February 2012 03 February 2012 04 February 2012 05 February 2012 06 February 2012 07 February 2012 08 February 2012 09 February 2012 10 February 2012 11 February 2012 12 February 2012 13 February 2012 14 February 2012 15 February 2012

TT BUYING EXCHANGE RATE FOR 1$ RATE FOR 1$

49.53 49.13 48.96 48.96 48.96 48.68 48.92 48.92 49.29 49.64 49.64 49.64 49.32 49.33 49.25

TABLE below shows the TT Buying Rate between the period 1st Feb, 2012 till 15 th Feb, 2012 and the Exchange Rate during the same period. The TT BUYING rate has been taken from the website : http://www.eximin.net/Forexdetails.aspx and the EXCHANGE RATE has been taken for comparison purpose from the RBI Website http://www.rbi.org.in/scripts/ReferenceRateArchive.aspx

NOTE : The Data for 4th , 5th , 11th and 12th February were not available being

Saturday and Sunday we have taken the data of preceding Friday for the purpose of preparing the Graph

COMMENTARY
The Rupee have been depreciating since August 2011, the fall of rupee vs. Dollar created the same conundrum what the rupee appreciation caused in year 2007. However, the impact has reversed this time with exporters making appreciated revenues and the importers feeling the heat. The increased demand for dollars vis--vis the India rupee has led to a sharp depreciation with rupee falling close to 18% from the Aug 2011 levels, and hitting an all time low of 54.32/USD on 15th December 2011, making it the worst performing Asian currency of the year. Taking a closer look at these issues, the fall in rupee can be attributed primarily to 3 broad factors. Firstly, the grim global economic outlook, essentially due to the European debt crisis. Due to turbulence in European markets, investors were considering dollars as a safe haven for their investments in the longer run. This led to an increased demand for dollars vis--vis the supply for rupee and thus the depreciation. Another line of thought could be that while investors are shifting from European markets, why are they not investing in the Indian markets? The Indian economic scenario for the entire 2011 has been plagued by high rate of inflation, hovering above 8%, and extremely low growth in manufacturing sector. The HSBC-PMI (Purchasing Managers index) fell to 51 in the month of December 2011. The cumulative effect of these factors is leading to a shift in investor sentiments towards dollar market. Secondly, the fall in rupee can be largely attributed to the speculations prevailing in the markets. Due to a sharp increase in the dollar rates, importers suddenly started gasping for dollars in order to hedge their position, which led to an increased demand for dollars. On the other hand exporters kept on holding their dollar reserves, speculating that the rupee will fall further in future. This interplay between the two forces further fuelled the demand for dollars while sequestering its supply from the market. This further led to the fall in rupee. Lastly, there has been shift of FIIs (Foreign institutional investors) from the Indian markets during the current financial year 2011. FIIs leads to a high inflow of dollars into the Indian market. As per a recent report, the share of Indias FII in the developing markets has decreased considerably from 19.2 % in 2010 to 3.8% in the year 2011. As FIIs are taking their investments out of the Indian markets, it has led to an increased demand for dollars, further leading to a spiraling rupee. RBI has been extremely cautious in its intervention during the entire rupee depreciation crises. RBI has however reacted with timely interventions by selling dollars intermittently to tame sharp fall in the

currency. The outflow of dollar reserves from RBI coffers has been extremely cautious, mostly due to the dwindling foreign exchange reserves. The foreign exchange reserves of India in December 2011 stood at 270 billion USD. Recently RBI has intervened with key policy initiatives such as intervening in the forward contracts policy. As per new RBI policy the cancelled forward contracts cannot be rebooked. Exporters in order to rake in more profits, were booking forward contracts, then cancelling the contracts, and again rebooking at better rate. This process led to a further depreciation in rupee and fuelled speculations. Also, RBI intermittently put trading limits for the banks in the foreign exchange market in order to tame the speculative forces. The rupee appreciated against dollar by 2.6 per cent in January and 4.4 per cent in February. The rupee appreciated in value from a low of Rs 52.34 per dollar, to Rs 51.34 in January and to Rs 49.17 in February. RBI's intervened in the market to arrest the depreciating rupee, the initiative to arrest the declining value of rupee yielded results and the value of the Indian currency appreciated by 4.4 per cent vis-a-vis US dollar during February. RBI had taken a number of steps to augment supply of foreign exchange and curb the speculation in the market to stem rupee decline. So the rupee stabilised in the month of January and February. Indian Rupees to 1 USD

latest (Ma lowest (Fe highest (M 120 days y 23) b 3) ay 23) 56.0052 48.8047 56.0052 Average Rates January 51.1976 INR (22 days average) February 49.1978 INR (21 days average) March 50.404 INR (22 days average)

April 51.7775 INR (20 days average) May 53.9201 INR (17 days average) The appreciation in Rupee in the Month of January and February was temporary and rupee has been depreciating against Dollar in last three months. The Rupee has been the worst performing among its Asian peers, having lost 22 percent this year. To check the sliding rupee, RBI has taken a slew of policy steps to increase dollar flows, including relaxing interest rates caps on nonresident deposits and asking exporters to convert half of their foreign currency earnings into rupee. As it turns out dollar-rupee is headed higher. The reasons for that are again the same. We have a huge current account deficit. There is also a fiscal deficit issue. The fiscal deficit actually works as double sword, in the sense that it weakens confidence and investment into the country. The other problem it creates is the transmission mechanism of a higher dollar-rupee, which should ordinarily lead to a contraction in the current account deficit, gets delayed because we have administered price for imports such as fuels. These are the two reasons. The third reason is of course the much spoken about policy paralysis in India. The net result is that reforms have stalled. We have not seen movers make by the government in the recent past. So, those are the reasons why rupee has depreciated more than Asians in the recent past. ~0~