Rupee may trade in 56.60-55.95 range in spot: Nirmal Bang

Nirmal Bang has come out with its report on currency. According to the research firm, the local currency is expected to trade in a range of 56.60-55.95 in the spot market.

The partially convertible rupee fell at one point to a record low of 56.55 to the dollar, surpassing its previous low of 56.52, as the euro and other risk assets were hit by disappointment about the size of bond purchases from the Federal Reserve and by weak global economic data. However, the local currency recovered losses on the back of rallying domestic equities to settle at 56.30/31 versus its 56.15/16 close on Wednesday. The Reserve Bank of India made what traders described as a "mild" attempt at defending the currency early in the session, and it may have acted again after the currency briefly surpassed the previous record low hit on May 31. Just like in May, when the rupee tumbled to a string of record lows, renewed global risk aversion has been the spark for the falls in the rupee, but the decline has been sustained by the deep uncertainty about India's fiscal and economic outlooks. Though, a sharp weakening might be prevented if importers and oil companies have covered most of their hedging needs for the months ahead. The local currency is expected to trade in a range of 56.60-55.95 in the spot market.

The safe-haven U.S. dollar hovered at 1-1/2 week highs against a basket of major currencies, staying buoyed following a long-anticipated credit ratings downgrade of the world's major banks by Moody's. The dollar had staged its biggest rally in over three months overnight as alarm bells rang out after key surveys of business activity from China to the euro zone and the United States darkened the outlook for the world economy. DXY last traded at 82.316, having rallied nearly 1 percent yesterday. It rose as high as 82.398. The moves came after China's factory sector shrank for an eighth straight month, business activity across the euro zone contracted for a fifth month and U.S. manufacturing grew at its slowest pace in 11 months. All of which hit appetite for risk. As a result, the euro fell to $1.2547, pulling well away from this week's peak of $1.2748 set on Monday. It came close to testing major support at $1.2520, a low carved out on Monday in reaction to initial Greek exit poll results.

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

Read More