eVENING REPORT FEB 17

The Rupee took a sharp blow against the U.S. dollar as most banks rushed to buy the greenback noting the dollar's rise against most Asian units and tracking the rise in the non-deliverable forwards rate. The dollar rose broadly while the euro hit a more than two-month low pressed by concerns over a recession in eastern Europe and the knock-on effect on European banks. However, the single currency pared some losses after data showed a surprise pick up in the German ZEW economic sentiment survey in February. The Euro fell to a 10-week low against the dollar after Moody’s Investors Service said it may downgrade a number of banks with units in Eastern Europe, adding to concern financial turmoil in the region is worsening. The Euro also weakened for a second day against the yen on speculation its declines triggered the execution of automatic sell orders. . The greenback rose against the yen after Japan's finance minister said he would resign following criticism of his behavior at a weekend Group of Seven meeting. And ongoing concerns over the global economy, banks' balance sheets and corporate results kept investors wary, with European shares down on the day, boosting flows into the dollar, which is currently perceived as a safe-haven currency. The pound rose for a third day against the euro after the rate of inflation fell last month by less than economists forecast, prompting speculation the Bank of England may slow the pace of interest-rate cuts. The U.K. currency also rebounded from a two-week low versus the dollar as a government report showed price growth slowed to 3 percent, higher than the 2.7 percent median forecast of economists surveyed by Bloomberg. The pound declined earlier as slumping stock markets around the world prompted investors to buy the safest assets.