ICICIdirect.com has expect the US dollar to find buying support on decline against the rupee. Utilise declines in the US$/INR October contract to Sell target of 66.80 - 66.60.
ICICIdirect.com's report on currency
• Government bonds ended higher, with the benchmark note hitting an over one-week high, on expectations that the central bank may hold another round of open market purchase of debt. • The benchmark 6.97% bond maturing in 2026 ended at | 101.79 against the previous close of | 101.60 • The benchmark 6.97% 2026 bond yield fell to 6.72% from 6.75% on Monday.
• The rupee gained against the US$ on a strong rally in domestic equities. Market expectation of another rate cut on lower inflation also continues to support the rupee on any weakness • The dollar index remained almost unchanged with its gauge against major currencies facing headwinds near 98 level. US September core CPI data was lower at 2.2% vs. 2.3% in August weighing on a recent surge in the US dollar.
US$/INR derivatives strategy: Sell October Contract
• In the currency futures market, the most traded dollar-rupee October contract on the NSE ended at 66.79. The October contract open interest rose 9.08% from the previous day • November contract open interest rose 5.49% from the previous day • We expect the US dollar to meet supply pressure at higher levels. Utilise upsides in the dollar to go short on the US$INR pair.
|US$INR October futures contract (NSE )||View: Bearish on US$INR|
|Sell US$INR in the range of 66.95 - 67.05||Market Lot: US$1000|
|Target: 66.80 - 66.60||Stop Loss: 67.15|
|S 1/ S2: 66.80/66.60||R 1/R 2:66.95/67.15|
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