Sell USDINR; target of 67.75 - 67.70: ICICI Direct

ICICI Direct's currency report on USDINR

Spot Currency   
The rupee ended on a higher note, recovering the opening losses as decline in crude oil prices coupled with sliding domestic yields supported rupee • The US $ witnessed profit booking as risk - on mode staged recovery, even as major currencies managed to hold on to supports . British Pound jumped sharply post BoE monetary policy meeting as increase in hawks raised interest rate hike expectations. Euro rose from its supports near 1. 15 zone. We expect mild relief to emerging market currencies if US $ sees further declines.

Benchmark yield  
Sovereign bonds continue to rally as RBI’s bond buying as well as decline in crude oil prices is supporting domestic debt • US 10 - year yields declined to 2 . 90 % tracking weak crude oil prices as well as friction between US and global trading partners. However headwinds remain even as traders await further details of 10 % tariff on $ 200 bn of Chinese imports into US as well as plans of investment restrictions on China by the US.

Currency futures on NSE
Near - month dollar - rupee June contract on the NSE was at 68. 04 in the previous session. June contract open interest declined 2. 67 % in the previous day • We expect the US$INR to meet supply pressure at higher levels. Utilise upsides in the pair to initiate short positions.Intra-day strategy

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