Evening Report-April 20.

Rupee at closed at 50.25/27 per dollar as losses in other Asian currencies and paring of rise in local stocks weighed on sentiment.India’s central bank may resort to "unconventional" measures to spur demand for bonds and help the government finance economic stimulus spending.RBI has lowered interest rates five times since mid-October and may cut the overnight lending rate by half a percentage point to 4.5 percent tomorrow. He may reduce the reverse re purchase rate by at least a quarter- percentage point to 3.25 %The dollar has been supported overnight as risk appetite has faded ahead of a week of significant event risk. The economic calendar is relatively empty with only the leading indicator gauge scheduled for release. The forward looking measurement is expected to decline by another 0.2% indicating that the economy will continue to weaken over the next three months. The remainder of the week will much more eventful with 40% of the Dow and 25% of the S&P 500 reporting earnings this week. If earnings reports continue to surprise to the upside we may see equity markets build on recent gains and lead to dollar weakness. Indeed, the OECD’s Gurria stated that there are positive signs emerging from China and the U.S. and if markets start to believe that a recovery is around the corner then we could see risk appetite sustained over the medium term. However, clear signs of a recovery will most likely not emerge until the end of 2009 which could lead to choppy price action in the short-term. The Euro has also come under pressure as traders continue to steer clear of the single currency, as the ECB remains divided over future easing and non-standard measures. The euro/dollar fell to as low as 1.2952 as it has clearly broken below the 50-Day SMA at 1.3037. German Zew and IFO surveys latter in the week will give some insight into prevailing sentiment and whether the central bank’s division is weighing on optimism. Many expect that ultimately we will see another 25 bps rate cut and some form of quantitative easing. The pound has traded heavy throughout overnight trading falling over 200 pips to 1.4550 as a week full of event risk has spurred risk aversion. U.K. CPI and employment figures are due over the next two days which are expected to support the BoE’ contention that inflation will undershoot their 2% target and the economy will continue to slow until the end of 2009. There have been some positive signs recently for the economy which continued today as Rightmove reported that house prices rose for a third straight month by 1.8%. On Wednesday the government will unveil its budget which is expected to be focused on growth and should contain measures to help the unemployed. Yet, Chancellor Darling is expected to forecast that the economy will contract by 3.5% this year and that recent bailouts will become a tax burden going forward. USD/JPY is trading in a range between 98.65 intra-day low and 99.15 levels for the day