USDINR opened at 82.35 y’day and the pair traded in the 82.35-82.65 range. Spot USDINR closed at 82.59, gain of 20 ps for USD as against prior close of 82.39.

RBI reference rate was fixed at 82.47 on 18/05. May USD/INR closed at 82.60, gain of 21 ps for USD as compared to prior day’s close of 82.39. May Euro/INR closed at 89.35, GBP/INR at 102.68 and Yen/INR at 60.05. USDINR fwd premia was trading at around 2.10% p.a.  FX reserves climbed USD 8 bn as compared to prior week and stood at USD 596 bn as on May 5 th. This is the highest since June 2022.

In May till date, FII’S  have bought Rs 16682 Cr of Equities and have bought Rs 352 Cr of debt . In 2022-23 fiscal year, FII’S have net sold Rs 27593 Cr of Equities and have net bought Rs 838 Cr of debt.

Benchmark Nifty declined 52 points (0.28%) y’day. DOW climbed 115 points (0.34%) y’day. Nikkei climbed 1.60% and Hang seng climbed 0.85% y’day..

Euro is now at 1.0840, Pound at 1.2482, Yen at 137.36.

Commodities: Gold is now at USD 1958 and WT1Crude at USD 72/Brent at USD 76.

Interest rates: USD 10 Yr yield is at 3.65% and 3 m libor closed at 5.33%. Indian 10 yr benchmark yield closed at 6.98%.

Economic news: Rupee declined tracking fall in Chinese Currency. Demand from Oil companies also contributed to Rupee fall. RBI sold USD at 82.55. RBI has been intervening on both sides. S&P reaffirmed India’s sovereign and Currency ratings at BBB- long term.

Dollar index has gained around 2% in the last few weeks and this could be attributed to market’s wrong reading of Fed’s future move. Market expected Fed to tone down rhetoric and even effect rate cuts in last quarter of this year. On the contrary, Fed officials are sounding hawkish and intend to raise rates again, even at the cost of recession. This changing dynamic has pulled Crosses lower.

Chinese Yuan has declined to 7.05, fall of around 5% from its recent lows. Disappointing Chinese economic data has triggered weakness in Yuan and fall in Crude Oil.

The silver lining is that Indian trade deficit is trending down and Global equity indices are in rally mode. RBI’S likely intervention at the higher end could pull Rupee back. If USD index breaks 101, Rupee could gain back below 82.

Data highlights: – US Weekly jobless claims dipped to 242k and existing home sales dipped to 4.28 mn.

Friday’s calendar : – No major data release.

 Daily Support/Resistance table

MAJOR SUPPORTS/RESISTANCES AND TREND TABLE

Technicals: Spot closed above all major major moving averages.20 day moving average is at 82.04. 50 day moving average is at 82.17.200 day moving average is at 81.49. Daily MACD is in buy zone. Important support is at 82.48/82.35 and important resistance is at 82.70/82.80. Spot closed above the average level of the day.

Intraday supports and resistances for May contract are:

PP: 82.55, S1:82.42, S2:82.24, R1:82.73, R2:82.86.             

Hedging strategy: Hedging decisions be taken according to comfort and accounting rates.

However on directional basis, suggest the following:

USD Exports be hedged.

CROSS CURRENCY TECHNICALS:

EURO/USD: The pair is below 20, 50 but above 100 and 200 day major moving averages. Major resistance is at 1.1075. Next major support is at 1.08/1.0750. Daily MACD is in sell zone, implying an important top at 1.1075. Weekly MACD is in buy zone, implying important bottom at 1.0515.

GBP/USD: The pair is above 50,100 and 200 day moving averages . Daily MACD is in buy zone, implying important bottom at 1.2345 and weekly MACD is in buy zone, implying important bottom at 1.1803. Important support is at 1.2350/1.2250. Important resistance is at 1.2675.

USD/YEN: The pair is below   200 day moving average. Daily MACD is in sell zone, implying important top at 137.75. Important resistance is at 137.75 and support is at 133.50/132/130.60.

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