Rupee will trade with a softer bias as long as the US dollar continues to gain. Today is the last working day. Tomorrow till Monday, banks and financial markets are closed in India. Only way rupee can gain is profit taking. Indian importers being allowed to cover hundred percent of imports can result in brief phases of very high demand. This is also a step to prevent the currency from sharp gains.
RBI governor says that the rupee should be assessed against a wider basket of currencies instead of only the dollar, and urged companies to hedge their foreign-exchange exposures no matter how they currently view the currency. He further said Modi’s government still has a window to take advantage of lower oil prices to cut fuel subsidies, and called for measures to narrow the fiscal deficit, improve growth and reduce inflation. The governor is “not overly concerned” about a crash in Indian markets or sudden outflows when the Fed raises rates because the RBI has taken steps to increase maturity of debt inflows.
Our view: The RBI governor’s view implies that rupee may not gain in the way as investors currently forecast. There could blips of sharp gains which (according to the RBI governor) should be used by importers to cover their payables. RBI intervention will continue to prevent the rupee from very sharp gains (if any) and its level will be based on REER (Real Effective Exchange Rates) values.
Better to remain on the sidelines today. There can profit taking towards the latter half of the trading day.
Usd/inr October 2014 (expiry on 29th October): There is a technical congestion between 62.48 and 62.67. Only a break of 62.48-62.67 zone will result in another wave of rise to 63.60. Initial support is at 62.02 and there will be sellers only below 62.02.
Euro/inr October 2014 (expiry on 29th October): Euro/inr needs to trade over 78.49 to rise to 78.96-79.37. There will be sellers only if it trades below 78.49 in UK session.
Gbp/Inr October 2014 (expiry on 29th October): It needs to trade over 100.54 to rise to 100.9550-101.3725. There will be sellers if cable trades below 100.54 in UK session with 100.32 and 99.99 as the key supports.
Jpy/Inr October 2014 (expiry on 29th October): It needs to trade over 56.7650 to rise to 57.06-57.36. Initial support is at 56.4750. There will be sellers only below 56.4750.
RBI governor says that the rupee should be assessed against a wider basket of currencies instead of only the dollar, and urged companies to hedge their foreign-exchange exposures no matter how they currently view the currency. He further said Modi’s government still has a window to take advantage of lower oil prices to cut fuel subsidies, and called for measures to narrow the fiscal deficit, improve growth and reduce inflation. The governor is “not overly concerned” about a crash in Indian markets or sudden outflows when the Fed raises rates because the RBI has taken steps to increase maturity of debt inflows.
Our view: The RBI governor’s view implies that rupee may not gain in the way as investors currently forecast. There could blips of sharp gains which (according to the RBI governor) should be used by importers to cover their payables. RBI intervention will continue to prevent the rupee from very sharp gains (if any) and its level will be based on REER (Real Effective Exchange Rates) values.
Better to remain on the sidelines today. There can profit taking towards the latter half of the trading day.
Usd/inr October 2014 (expiry on 29th October): There is a technical congestion between 62.48 and 62.67. Only a break of 62.48-62.67 zone will result in another wave of rise to 63.60. Initial support is at 62.02 and there will be sellers only below 62.02.
Euro/inr October 2014 (expiry on 29th October): Euro/inr needs to trade over 78.49 to rise to 78.96-79.37. There will be sellers only if it trades below 78.49 in UK session.
Gbp/Inr October 2014 (expiry on 29th October): It needs to trade over 100.54 to rise to 100.9550-101.3725. There will be sellers if cable trades below 100.54 in UK session with 100.32 and 99.99 as the key supports.
Jpy/Inr October 2014 (expiry on 29th October): It needs to trade over 56.7650 to rise to 57.06-57.36. Initial support is at 56.4750. There will be sellers only below 56.4750.
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