Expect USD to attract selling pressure against INR

ICICIdirect.com has come out with its report on currency. According to the research firm one can utilise the highs in the USDINR February contract to sell.

Forex (US$/INR): INR strengthens
• Suspected dollar sales by the Reserve Bank of India helped the rupee to recover all intraday losses on Friday. However, the currency still posted its biggest weekly fall in nine weeks
• The INR ended at 49.40/41 per dollar, strengthening by 0.2% from the previous day's closing of 49.50/51 per dollar
• The dollar index against six major currencies was up by 0.5% at 79.0 on Friday
• On February 10, 2012, FIIs bought (net) Indian shares worth US$294.3
million. For the current month to date, FIIs bought US$1940.2 million while for the year FIIs bought US$3977.5 million

Derivatives strategy: Sell February contract
• In the currency futures market, the most traded near-month dollar-rupee contract on the NSE closed at 49.63. The US$/INR February open interest was up by 9.7%
• The March contract witnessed an increase in open interest by 0.9%
• We expect the US dollar to attract some selling pressure on rallies against the INR. Utilise the highs in the US$/INR February contract to sell

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To read the full report click on the attachment