Buy USDINR; target of 71.60 - 71.70: ICICI Direct

ICICI Direct's currency report on USDINR

Spot Currency

The rupee on Wednesday appreciated by 7 paise to end at 71.24 against the US dollar following gains in the domestic equity market. It seems to be consolidating as market participants are assessing the economic implications of the coronavirus outbreak and awaiting cues from the Union Budget • The US Dollar Index edged up 0.1% for the day to 98.06, as the Fed kept its monetary policy stance unchanged in the backdrop of uncertainty.

Benchmark yield

Indian bonds edged lower ahead of a | 13000 crore ($1.8 billion) treasury-bill sale. The 10-year yield rose 1 bps to 6.59% after climbing 2 bps on Tuesday • The yield on the 10-year US treasury note dropped to its lowest closing level in over three months on Wednesday. This was on the back of the spreading coronavirus causing airlines to cancel flights to China and the Federal Reserve doing little to change investors' expectations that it could cut interest rates later in the year.

Currency futures on NSE

The dollar-rupee February contract on the NSE was at 71.47 in the previous session. Open interest increased by more than 8% in the previous session • Utilise downsides in the pair to initiate long positions.

Intra-day strategy