Rupee and Asian Market update

Volatility in India’s rupee rebound from a four-month low as the currency declined on sales of the nation’s assets by overseas funds,analysts from Bloomberg reported.
A measure of India’s exchange-rate swings fell to the lowest since September this week, approaching levels before Lehman Brothers Holdings Inc. filed for bankruptcy, even as the rupee headed for a monthly loss. The deepening global economic slump can prompt foreigners to dump riskier emerging-market assets, increasing rupee volatility and losses,observed one analyst.Asian currencies including the rupee look set to decline against the dollar as investors remain risk averse amid the deteriorating global economic situation with the spot rupee market showing the way for options.

The rupee lost 0.7 percent this month, adding to the 19 percent slump since last year, as global funds sold $728 million more Indian stocks than they bought. All of the 10 most-active Asian currencies outside of Japan fell against the dollar this month.The rupee closed at 49.13 per dollar in Mumbai yesterday and could weaken to 50 in the coming weeks. Implied volatility on one-month dollar-rupee options was at 14.75 percent yesterday, the lowest since Sept. 26, Bloomberg data show. The gauge of fluctuations touched 33 percent on Oct. 27, the highest in at least nine years. Traders quote implied volatility, a gauge of expected swings in exchange rates, as part of option prices.

India’s Sensitive Index (Sensex) fell 6 percent in two days after Royal Bank of Scotland Group Plc forecast on Jan. 19 the biggest loss in U.K. corporate history, fueling concerns that mounting bank losses will renew risk aversion among global investors.
More excerpts from Forexpros.com. Asian markets overall opened slightly above the breakeven line, helped by the gains seen in the U.S. session. However, incoming data from the Asian economies look very downbeat.

The dollar traded in risk acceptance mode as stocks began their rally at about 11:00 EST, falling 0.78% on the euro, 0.27% to the pound and 1.77% against Australia's currency. The yen jumped after options expired at 10:00 EST, and the dollar ended up losing 0.40% for the day.

Crude oil was pulled higher by the gains in the U.S. stock market. Crude oil for February delivery gained $0.45 to $44.00.

Gold followed the commodities market closely, especially crude oil. Bullion for immediate delivery added $2.50 to $852.50.

Previous European trade: In Europe, the U.K. Ftse fell 31.52 points (-0.77%) to 4,059.88, while the German Dax rose 21.30 points (0.50%) to 4,346.77.