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Oct 22, 2013, 11.55 AM | Source: Moneycontrol.com

Expect Indian rupee to trade on negative note: Angel

According to Angel Broking, Indian Rupee is expected to trade on a negative note taking cues from weak global and domestic market sentiments coupled with strength in the DX.

Angel Broking's report on currency

The US Dollar Index (DX) traded on a flat note and gained marginally yesterday on the back of decline in US existing home sales data. Further, rise in risk aversion in market sentiments led to increase in demand for the low yielding currency. Unfavorable economic data from US indicated that QE tapering program would be delayed by the Federal Reserve which capped sharp gains in the currency. The DX touched an intra-day high of 79.88 and closed at 79.75 on Monday.

The Indian Rupee depreciated around 0.5 percent in yesterday’s trading session. The currency depreciated on the back of dollar demand from private oil firms, importers and custodian banks. However, sharp downside in the currency was cushioned on account of strong inflow of foreign funds coupled with upbeat domestic market sentiments. Further, notification from Reserve Bank of India (RBI) on Friday that it will continue with its swap window for OMC’s restricted negative movement in the currency. The Indian Rupee touched an intra-day low of 61.58 and closed at 61.57 on Monday. For the month of October 2013, FII inflows totaled at Rs.8670.30 crores (USD1409.80 million) as on 21st October 2013. Year to date basis, net capital inflows stood at Rs.81897.70 crores (USD15055.30 million) till 21st October 2013.

Outlook: In today’s session, we expect Indian Rupee to trade on a negative note taking cues from weak global and domestic market sentiments coupled with strength in the DX. Further, dollar demand from private oil firms and importers will exert downside pressure on the currency. However, sharp downside in the currency will be cushioned or reversal can be seen as a result of rising inflow of foreign funds.

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