Evening Report-Jan 19.

. The Rupee trimmed gains and closed at 48.64 after testing a high of 48.71 levels due to dollar demand from importers, and swaying stocks failed to provide cues on the direction of fund flows but the dollar's weakness overseas helped market sentiment especially demand for the greenback emerged after banks bought the greenback noting that the fall in sterling .The U.S. trading session will be quiet with markets closed for the MLK holiday. Therefore a lack of event risk will leave price action at the mercy of broader economic factors. The dollar may continue to benefit from safe haven flows as markets remain weary after last week saw the Bank of America go back to the government for additional aide and Citigroup announce the end of the business model as they try to survive. We may also see some positive green back flows due to the U.S. presidential inauguration as the new administration is expected to usher in a fiscal stimulus package in excess of $750 billion. The President Elects economic advisors have already announced that the remainder of the TARP funds will be focused on promoting credit to consumer s and businesses.Euro sold off ahead of the news falling to a low of 1.3245 as investors were expecting the dour forecast. Meanwhile the construction activity in the region dropped by1.1% in November which was the lowest in eight months confirming the expected impact of tight credit markets. The Euro could start to become range bound as the ECB signaled that it will forgo further action until its March meeting, where further easing is most likely. European Commission is forecasting a contraction of 1.9% reversing November’s prediction of 0.1% growth as tight credit markets and shrinking global demand weighs on its economies.Pound dropped over 200 bps as the British government announced that it would empower the BoE to buy toxic assets in an effort to promote lending. After a reaching as high as 1.4897 the Sterling would fall back to 1.4627 before finding support. The January Rightmove housing report showing a 1.9% drop in house prices started the pound’s sell off as further deterioration in the sector continues to add strain to the banking system. U.K. Prime Minister Gordon Brown announced today that the government would increase its role in the financial system by using the BoE’s balance sheet to buy at least £100 billion in troubled assets. The Prime Minister stated that this was not a bailout of U.K. banks but an effort to improve lending to consumer and businesses.Yen was roughly flat at 90.60 after hitting a high of 91.23 levels .Japanese Industrial production declined by a record 8.5% in November from the previous month, revised down from an initial estimate of 8.1% decline. Meanwhile, production was down 16.6% annually.