USD may attract buying against INR: ICICIdirect.com

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

Forex (US$/INR): INR weakens
• The Indian rupee ended a four day winning streak on Monday. Reversing early gains it rose to a more than four and a half month high as dollar demand from local oil refiners and big companies offset a rise in local shares
• The INR ended at 49.05/06 per dollar, weakening by 0.7% over the previous day's closing of 48.69/70 per dollar
• The dollar index against six major currencies was up by 0.2% at 79.1 on Monday
• On February 6, 2012, FIIs bought (net) Indian shares worth US$198.9 million. For the current month to date, FIIs bought US$1185.8 million while for the year FIIs bought US$3223 million

Derivatives strategy: Buy February contract
• In the currency futures market, the most traded near-month dollar-rupee contract on the NSE closed at 49.27. The US$/INR February open interest was up by 0.2%
• The March contract witnessed an increase in open interest by 3.2%
• We expect the US dollar to attract some buying on declines against the INR. Utilise the lows in the US$/INR February contract to buy

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To read the full report click on the attachment