Currency Map:

USD/INR 75.26 74.99 0.36
EUR/INR 87.32 86.59 0.84
GBP/INR 103.02 102 1.00
JPY/INR 66.33 67.01 -1.01

Brent Crude closed at USD 84.85 VS prior week close of USD 82.54. Gold closed at USD 1768.Nifty closed at 18338 vs prior week close of 17895. 10 Year G-SEC Yield closed at 6.33%.

Major developments: USDINR traded in the 75.05-75.68 range and closed at 75.25 as against prior week close of 74.99. Rupee declined 0.36% w/w. EUR climbed 0.84% and GBP climbed 1% w/w against Rupee. Indian benchmark Equity index climbed 2.47% w/w. 10 Year G-SEC Yield closed at 6.33%. 1 year fwd premia is at 4.40% p.a.

USDINR softened from 75.68 on exporter selling and sporadic RBI intervention. Rupee’s fall has tracked steep Crude Oil gains. However, Rupee will be supported by inflows. FDI flows has surged further in Apr-July this year and the trend is likely to continue. PayTM is planning huge IPO. LIC IPO is also expected in coming months. For the present, USDINR could trade in the 74.65-75.65 range.

CPI inflation eased to 4.35%. Food price inflation eased to 0.68%. IIP climbed 11.9% in Aug. Mfrg grew by 9.7%. Capital goods sector climbed 19.9%.

In Oct, FII’S have net bought Rs 962 cr in Equity segment and have net sold Rs 2051 cr of debt. In this financial year, FII’S have net bought Rs 6249 Cr worth of Indian Equities and have bought Rs 17337 Cr worth of Indian debt. In 2020-21 financial Year, FII’S nett bought Rs 2,74,203 Cr of Equities and have sold Rs  42820 Cr in debt.

Global developments: US data was robust with inflation elevated. Crude Oil, Equity indices and metals are back in rally mode after a few days/weeks of pause. FOMC minutes showed that members are becoming apprehensive of inflation as it is becoming persistent. Labour shortages in certain services, supply side issues and high energy prices are likely to keep inflation elevated. FOMC may take steps to end QE in its next meeting. US retail sales was robust, giving relief over economic growth. The retail sales report suggests that consumer demand is proving resilient to the latest infection wave and the winding down of more generous pandemic unemployment benefits.

Pound was strong on hawkish comments by BOE members. Euro managed to gain marginally against USD. Yen weakened on energy prices and US Yields.

Currency range forecast: USDINR: 75.05/74.65(support)-75.68(Resistance), EURINR: 86.70/85.75(support), 87.35(Resistance), GBPINR: 101.50.(support), 103.30- Resistance, JPYINR: 64.50-66.50.   

Suggestion: Cover USD import payables on dips to 74.70. Receivables can be monitored and hedging can be initiated at 75.50+. EURINR receivables can be hedged closer to 87+. GBPINR receivables hedging can be done at around 103+

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