EVENING REPORT-MAR 13.

The Indian rupee extended gains on as a 4 percent rise in the domestic share market helped ease outflow worries with the dollar's drop against some Asian currencies also boosting the local unit.The dollar continued to lose ground overnight as risk appetite grew on the back of comments from Bank of America CEO and expectations of more stimulus measures from Japan and China. Indeed, the troubled bank leader is expecting earnings of $50 billion for the year which reinforced comments from Citibank that t would be profitable in the first quarter. Stock markets have continued to find support as the end of the banking troubles gets closer. The University of Michigan consumer confidence survey could dampen optimism as forecasts are calling for the reading to fall to an all-time low of 55.0. If Americans continue to retrench it will limit future domestic growth and weigh on earrings expectations. The U.S. trade balance is also expected to cross the wires with the deficit expected to shrink to -$38.0 billion from -$38.9 billion which would be the lowest in six years. The contraction n consumer consumption is expected to have impacted demand for imports despite the dollar’s recent strength. The Euro fell to as low as 1.2890 after the release before finding support.the Euro began trading heavy leading up to the January Retail Sales Report. Consumer consumption in the region rose by 0.1% which was below the forecast of 0.2%. Additionally, the annualized rate fell for eighth month to -2.2% after a revised lower -2.4% the month prior. Consumers continue to tighten their wallets as a deepening recession has weighed on their confidence..The dollar also came under pressure versus the sterling, falling to 1.4060 from an overnight level near 1.3900.The Pound extended its gains from yesterday reaching as high 1.4071 as rising equity markets helped buoy demand. . However, the remarks from BoE member Kate Barker that the central bank should continue to print money as “The evidence over the last month was of more pronounced weakness in the global economy and of fragility in the financial markets” could weigh on the pound.Japanese yen tumbled to new multi-month lows against the euro, the kiwi and the aussie as a gain in equities boosted investors' risk appetite, dampening demand for the yen. n carry trades, speculators get funds in a country with low borrowing costs and invest in one with higher returns, earning the spread between the two. The risk is currency fluctuations erase profits between the two rates.