Mecklai graph of the day: EURUSD & USDINR decoupling?

Mecklai Graph of the Day - EURUSD & USDINR decoupling?

USDINR has had a strong inverse correlation ship with EURUSD in the past i.e. whenever EURUSD appreciated, USDINR depreciated and vice versa. However, the same has started to decouple since the past couple of weeks, as can be observed in the graphs shown above. The ongoing debt turmoil across the Euro zone has continued to weigh in quite heavily on EURUSD, with the selling in the pair intensifying further into 2012 amid fears (which turned out to be a reality) of rating downgrades across the 17-member area. On the other hand, despite of slide in EURUSD to its weakest reading since the past 17-months, USDINR has continued to decline quite sharply since the beginning of 2012. Earlier today, the pair declined to its 2-month low of 50.88. Such weakness in the pair is broadly on the back of strong inflows into the domestic debt segment, which has almost touched $3 billion mark so far in 2012. The correlation between the pair has remained mostly in negative zone with average range of -0.80 to -0.90 since April 2011. However, from past four trading sessions it has swiftly turned into positive and today stayed firmly at +0.70. If this correlation stays positive in coming sessions then we can conclude that USDINR has decoupled with EURUSD. Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. To read the full report click on the attachment

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