Rupee to closely track Yuan, USD dynamics

Abhishek Goenka IFA Global

US equities snapped a 5 day winning streak. The US Dollar strengthened and US yields came off. After a steep upmove in equities, sentiment was that of caution in the absence of any triggers. Gold in USD terms is at its highest since 2011.

The RBI continued to buy USD and pay forwards, crushing shorts in trade yesterday. We could see similar price action today as well. There is not much on the data front. Price action is likely to largely flow driven.

Rupee is likely to trade a 74.70-75.10 range intraday. Nationalized banks may continue to intervene to smoothen volatility.

FPIs are utilizing 40% of their limit in Gsecs in general category and 37% of their limit in corporate bonds

EIA crude inventory data due today.

Strategy: Exporters are advised to cover between 75.00 - 75.40 through forwards. At lower levels only cover through option strategy. Break below 74.50 may possibly take rupee to 73.80. Importers are advised to hold maintaining a stop loss of 75.50 or cover through risk reversal option. The 3M range for USDINR is 73.60 - 76.50 and the 6M range is 73.00 - 77.00.

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Author

Abhishek Goenka

IFA Global

Mr. Abhishek Goenka is the Founder and CEO of IFA Global. He pilots the IFA Global strategic direction with a focus on relentlessly improving the existing offerings while constantly searching for the next generation of business excellence.

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