Sell USDINR; target of 71.70 - 71.60: ICICI Direct

ICICI Direct's currency report on USDINR

Spot Currency

The rupee recouped some of its previous losses vs. the US$ and closed higher by eight paise, helped by softer oil prices as well as a ranged US$. The rupee may open slightly weaker today amid risk off sentiment due to the US President’s fresh tariff threat • The US$ ended the session with further losses as reinitiating tariffs on Brazilian and Argentinian steel has raised fears that it could jeopardise the US-China trade talks. Euro jumped sharply due to a sell-off in the US$. The CNY is currently trading near 7.04 levels. Further weakness in the same could put pressure on EM currencies, including the rupee.

Benchmark yield

Domestic benchmark 10-year yields ended a bit higher at 6.49% in the previous session. Growing worries over domestic growth as well as hardening US yields could contain a sharp appreciation in domestic debt • US 10-year benchmark yields ended further higher at 1.82%. Investors are likely to track the upcoming US November employment data as well as direction of US-China trade talks.

Currency futures on NSE

The dollar-rupee December contract on the NSE was at 71.83 in the previous session. Open interest declined 0.63% 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.

Intra-day strategy 

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