Rupee weakens

There are concerns that rupee could weaken further against the US dollar on  profit taking in stock markets before the Federal reserve meeting and election result declaration on 16th May. Global investors are also concerned that there can be a general emerging market sell off if Ukraine tensions escalate and get prolonged. There are more short positions in the rupee for now. Most of the small scale and medium sized exporters have already sold forward their near term receivables. Importers are delaying their near term payables. If there are any indications of a near term  weakness in the rupee then there could be a double whammy in the form of short covering and importers rushing to cover near term payables. Sell stop losses will be triggered if rupee breaks past 61.30 against the US dollar in the inter-bank market. (anytime in the next two weeks). 

I am of the belief that currency price movement should be around fundamental values. A weaker yen against the US dollar is reflecting the same. Growth difference between USA and Eurozone is very wide. Euro should fall against the US dollar. We prefer to buy near dated as well as far dated put options of euro/usd and euro/inr. One needs to use higher stop losses for selling naked spot and future of euro/usd and euro/inr. 



Usd/inr April 2014:  It can rise to 60.88 and 61.32 as long as it trades over 60.5350. There will be sellers only below 60.5350

Euro/inr April 2014: A break of 83.82 will result in 84.19 and 84.76. Initial support is at 83.60 and there will be sellers only below 83.60

Gbp/Inr April 2014: It needs to trade over 101.90 to target 102.15-102.69. There will be sellers only below 101.66 today

Jpy/Inr April 2014: It can rise to 59.42 and 59.77 as long as it trades over 58.77.