Currency Map:

USD/INR 71.14 71.01 0.18
EUR/INR 79.29 78.52 0.98
GBP/INR 91.59 89.81 1.98
JPY/INR 65.61 65.50 0.16


Brent Crude closed at USD 59.30 VS prior week close of USD 60.65.

Nifty closed at 11661 vs prior week close of 11305.

10 Year G-SEC Yield closed at 6.52.

Major developments: It was a volatile trading week for USDINR. The pair traded in the 70.74-71.03 range. It closed at 71.14, registering a nominal gain for USD. GBPINR climbed 1.98%, due to steep rally in Pound against USD. EURINR also climbed 0.98% w/w.

Indian Equity indices climbed 3.14% due to better than expected quarterly results from major companies. US- China mini trade deal and Brexit optimism fuelled positive sentiment. FII’S turned as big buyers of Indian Equities last week. FII’S have nett bought  Rs 5269 Cr of Indian Equities in Oct . FII’S have nett bought Rs 50753 Cr of Indian Equities in this calendar Year till date. FII’S have nett bought Rs 432 Cr of Indian debt securities in Oct. FII’S have nett bought Rs 29580 Cr of Indian debt in this calendar year till date.

Indian CPI climbed higher, while trade deficit declined. Indian CPI climbed to 3.99% in Sept. Food inflation climbed to 5.11%. WPI eased to 0.33% in Sept. Indian trade deficit narrowed to USD 10.86 bn in Sept as against USD 14.95 bn during the same period last year. Exports fell 6.53% to USD 26.03 bn. Imports was down 13.85% to USD 36.89 bn. Oil imports declined 18.33% to USD 8.98 bn. Exports is down 2.39% in Apr-Sept period to USD 159.57 bn. Imports contracted 7% to USD 243 bn.

Focus will be on corporate results, auto sales and US-China trade and Brexit developments.


Global developments:

-USD ended the week lower against Euro and Pound. Global markets continued to experience a roller coaster ride. Quarterly Corporate results, Brexit developments and US- Chinese min trade deal continued to dominate market developments. Markets shrugged off poor Chinese GDP data. China’s GDP growth slowed further to 6.0% yoy in Q3, down from 6.2% yoy in Q2 and missed expectation of 6.1% yoy. That’s also the worst pace since Q1 of 1992.

Sterling remains the strongest one, buoyed by UK Prime Minister Boris Johnson’s new Brexit deal with EU. However, UK Parliament has rejected the deal and called for Brexit delay. The impact of this development will be known on Monday.

IMF downgraded Global economic growth to 3%, down from July forecast of 3.2%. India is expected to grow by 6.1% in this fiscal.

US retail sales data was weaker than expected and could force Fed to take note of this new data. Fed’s beige book noted that economic activity has moderated in the period covering mid-August through September. Tariffs, prolonged uncertainty and slower global growth were deepening the manufacturing slump and are pushing businesses to trim their growth outlooks.

ECB meeting and rejection of Brexit deal are the focus events for the coming week.

Important developments in coming week: US durables data, EU mfrg data and ECB meeting outcome.

Currency range forecast for coming week:

USDINR: 70.95-71.80, EURINR: 78.50-79.60, GBPINR: 90-93, JPYINR: 65-67.

Suggestion: Cover 1-2 month USD import payables on dips to 70.95. EURINR payables can be hedged at 78.60. EURINR receivables can be hedged closer to 79.50. GBPINR receivables hedging can be done partly.


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