ICICI Direct expects USDINR to meet supply pressure at higher levels. Utilise upsides in the pair to initiate short positions.
ICICI Direct's currency report on USDINR
The rupee closed higher for a fifth consecutive session, appreciating by 12 paise vs. the US$, registering its highest close since November 7, 2019. The Indian currency has been on an upswing since the RBI policy decision wherein it did not cut rates citing inflation threat. This has helped India maintain the real rate. Also, CNY appreciation is supporting rupee strengthening • The US$ ended the session further lower yesterday even as investors braced themselves for significant events lined up this week. UK election, Federal Reserve policy outcome, ECB monetary policies are lined up this week. Later, investors would be on the edge to know whether the US President approves further tariffs on Chinese imports, which were originally announced to be levied on December 15, 2019.
Domestic benchmark 10-year rose to 6.71% in the previous session even as domestic debt has come under selling pressure since the RBI did not cut interest rates as per market expectations • US 10-year benchmark yields closed slightly higher at 1.84%, overall remaining in a range. Investors would be tracking upcoming Fed policy outcome to gauge the Fed’s rate trajectory.
Currency futures on NSE
The dollar-rupee December contract on the NSE was at 71.03 in the previous session. Open interest declined 4.87% in the previous session • We expect the US$INR to meet supply pressure at higher levels. Utilise upsides in the pair to initiate short positions.
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|US$INR December futures contract (NSE)||View: Bearish on US$INR|
|Sell US$ in the range of 71.05 -71.09||Market Lot: US$1000|
|Target: 70.80 / 70.70||Stop Loss: 71.25|
|S1/ S2: 70.95 / 70.75||R1/R2:71.15 / 71.35|