Forex
RBI's placatory stance improves sentiment
BONDS continued their rally this fortnight on the back of easy liquidity and the Reserve Bank of India's strategy of going slow on auctions. After three weeks of no Government issuance, every trader in the market expected an auction in the first week of July. The central bank pleasantly surprised everyone by doing a private placement instead (the first this year), of 10.95 GoI 2011 for Rs. 3,000 crores.

Interest differentials alone do not drive currencies
IT was a somewhat jumpy move in dollar/yen towards the close of the previous week -- with the pair rising up to 108 levels after range-trading for some time around 104/105. Receding prospects of a Japanese rate hike were the immediate trigger for the upm ove in dollar/yen.

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