There is huge speculation that deffence related demand is the key reason for this weeks rupee weakness. India is set to pay Iran $1.65 billion over the next three months under an interim nuclear deal that eases sanctions on Tehran This means Tehran will have access to the next two installments, each of $550 million, which are due on May 14 and June 17. The final $550 million installment, due on July 20, is contingent on confirmation that Iran has fulfilled all of its commitment. Crude oil related payments could also result in temporary weakness for the rupee. There is not much news either in the domestic front or global front. Ukraine crisis has so far failed to create big emerging market outflows.
On the technical front a break of 61.40 (usd/inr) in the inter-bank market will trigger sell stop losses and another wave of rise. This week there have been huge sellers of put options in usd/inr. One needs to wait for some more time and sell naked futures with a higher stop losses. I will prefer to wait for some more time to sell naked usd/inr futures for the short term.
There are two key risk in the next three weeks (a) Federal reserve meeting next week (b) Indian elections results on 16th May and thereafter. There can be profit taking in Indian stock markets before these events and short covering in the rupee.
Usd/inr May 2014: Key resistance till next week is at 61.72 and only a break of 61.72 will result in further gains to 62.02-62.36. Support is at 61.22 and there will be sellers only below 61.22
Euro/inr May 2014: Key resistance is at 85.31 and only a break of 85.31 will result in further gains to 85.76-86.02. Support is at 84.92 and there will be sellers only below 84.92
Gbp/Inr May 2014: Resistance is at 103.4250 and only a break of 103.4250 will result in 103.96-104.20. Support is at 103.11 and there will be sellers only below 103.11
Jpy/Inr May 2014: It needs to trade over 59.71 to target 60.23 and 60.71. There will be sellers only below 59.71.
On the technical front a break of 61.40 (usd/inr) in the inter-bank market will trigger sell stop losses and another wave of rise. This week there have been huge sellers of put options in usd/inr. One needs to wait for some more time and sell naked futures with a higher stop losses. I will prefer to wait for some more time to sell naked usd/inr futures for the short term.
There are two key risk in the next three weeks (a) Federal reserve meeting next week (b) Indian elections results on 16th May and thereafter. There can be profit taking in Indian stock markets before these events and short covering in the rupee.
Usd/inr May 2014: Key resistance till next week is at 61.72 and only a break of 61.72 will result in further gains to 62.02-62.36. Support is at 61.22 and there will be sellers only below 61.22
Euro/inr May 2014: Key resistance is at 85.31 and only a break of 85.31 will result in further gains to 85.76-86.02. Support is at 84.92 and there will be sellers only below 84.92
Gbp/Inr May 2014: Resistance is at 103.4250 and only a break of 103.4250 will result in 103.96-104.20. Support is at 103.11 and there will be sellers only below 103.11
Jpy/Inr May 2014: It needs to trade over 59.71 to target 60.23 and 60.71. There will be sellers only below 59.71.
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