It will be a technical trade today with the direction of the US dollar dictating rupee and other emerging market currencies. The currency wars have just reached another level last week. The FOMC meet delay in US interest rate hike is just a move to prevent continued appreciation of the US dollar against the major currencies. Bank of England joined officials have indicated of another interest rate cut in the coming months. Cable nosedived after these comments. Federal Reserve and Bank of England were still (until last week) the only central banks of the world to raise interest during the course of the year. Major currencies will be fighting among themselves till the next Federal reserve meet in April.
Emerging markets currencies are more or less a happy lot as a result of the currency wars between major central banks. Lower energy prices along with a strong currency will result in them (a) with a greater chance of an interest rate cut (b) Lower imported disinflation will help in getting over higher domestic inflation. (c) Inflows in these nations from global investors will rise.
We believe that the pace of appreciation of the US dollar for the rest of the year will be at a pace slower than a snail. The current quarter has been a historical with respect to appreciation of the US dollar and may not repeated in the next few years. However NATO is hell bent on ruling Russia and is using currency manipulation and interest rate outlook for the same purpose. There is the huge political angle to what is happening in the global currency markets.
Usd/inr March 15 (expiry on 27th March 15):
- Key intraday support is at 62.3150. Usd/inr needs to trade over 62.3150 for 62.8075-62.925. The next wave of selling will be (a) below 62.3150 (b) usd/inr does not break 62.5375 today.
Euro/inr March 15 (expiry on 27th March 15):
- A break of 67.6550 will trigger another wave of rise to 68.3825 and 68.9272. Initial support is at 62.2675 with 66.9600 as key support till tomorrow.
Gbp/Inr March 15 (expiry on 27th March 15):
- Cable can rise to 93.8200 and 94.7175 as long as it trades over 92.8650-93.0075 zone. The next wave of selling will be only if cable trades below this zone.
Jpy/Inr March 15 (expiry on 27th March 15):
- Yen/inr needs to trade over 52.0250 today to rise to 52.4725-52.7775. On the lower side as long as 51.54-51.74 zone downside risk will be limited.
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