Evening Report-feb 12.

The Rupee slipped and closed at 48.84/85 against the U.S. dollar after moving in a narrow range because banks bought the greenback noting the over 1% fall in local share market . The non-deliverable forward dollar/rupee rate was steady, and moved in a thin band in line with the spot dollar/rupee movement India's industrial output contracted 2.0% compared with a growth 1.7% a month ago. India's headline inflation rate fell to a 55-week low of 4.39%. The fall in inflation rate was mainly on account of a sharp decline in fuel prices.U.S.Dollar remained mixed.The U.S. retail sales report is expected to show that consumer spending declined by 0.8% in January after a 2.7% drop the month prior. It marked the seventh straight monthly decline as consumers have continued to retrench as companies continue to slash jobs. . No that it appears that the "Obama Stimulus" is going to be passed; the outlook for consumer spending may increase with the expected tax cuts. Therefore, a mild decline in consumption in January could spark risk appetite, which could weigh on the dollar.The Euro fell over 100 bps below 1.2800 during overnight trading as the outlook for the European economy dimmed, adding to the heightened fears of an extended global downturn. Markets have become concerned that the impact from the efforts of the various nations to stimulate their economies won’t be enough to pull the global economy out of it s current downturn anytime soon. The European monthly report reinforced these sentiments as it lowered its growth forecasts for the region to –1.7% from 0.3% on the year. Meanwhile, industrial production in the region fell 2.6% in December dragging the annualized number down to –12.0%, which was an all-time high.Then pound also fell victim to investor fears and lower interest rate expectations as it dropped over 250 to below 1.2816 as risk appetite and lower interest rates expectations. The BoE in quarterly inflation report signaled that more a zero interest rate policy may be instituted by the central bank as it sees the downside risk to growth and inflation increasing. The yen rose against major currencies in safe-haven trades with investors avoiding risk as Japanese stock prices fell on disappointment over financial rescue plans in the United States