Currency Map:

USD/INR79.7879.65 0.28

Brent Crude closed at USD 96 VS prior week close of USD 98. Gold closed at USD 1760.Nifty closed at 17758 vs prior week close of 17698. 10 Year G-SEC Yield closed at 7.26%.

Major developments: USDINR traded in the 79.25-79.80 range last week and closed at 79.78 as against prior week close of 79.65. Rupee had a roller coaster ride, and ended weaker by 0.28% w/w.. EUR declined 2.18% w/w and GBP declined 2.36% w/w against Rupee. Indian benchmark Equity index  declined 0.33% w/w. 10 Year G-SEC Yield closed at 7.26%. 1-year fwd premia is at 3.02% p.a. FX reserves stands at USD 570 bn as on July 29 th.

Rupee showed weakening tendency tracking USD index’s gain. Equity indices climbed further. 10 year G-SEC stabilised. There were no major economic releases last week.

In Aug till date FII’S have net bought Rs 17970 Cr of Equities in Cash segment and have sold Rs 4015 Cr of debt till date. In this Calendar Year, FII’S have sold close to Rs 1.78 lac Cr worth of Equities. In 2021-22, FII’S net sold Rs 128897 cr in Equity segment and have net bought Rs 4805 cr of 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.

USDINR’s resistance is at 79.80. Upside break of 79.80 could weaken Rupee past 80.10 levels.

Global developments: Dollar index staged a strong rally last week to close at 108.16. The upside momentum is very impressive and it’s raising the chance of up trend resumption. USD index could break its previous high, should US 10 Year yield climb above 3.45% peak.

Fed minutes released on Wednesday showed U.S. central bank policymakers committed to raising rates as high as necessary to tame inflation – even as they began to acknowledge more explicitly the risk they might go too far and curb economic activity too much.

Focus is on US Durables order and spending data. Global Flash Manufacturing and Services PMIs will be released. In addition, the ECB will release the Minutes from its July meeting.  This usually isn’t a large market mover, but with EUR/USD heading towards parity, traders will be looking for hawkish clues to push the Euro higher. 

Currency technical levels: USDINR: 79.80 (Resistance), 79.20/78.90 (Supports), EURINR: 82.20(Resistance), 79.50 (Support), GBPINR:  97.50-98.80 (Resistance). JPYINR: 57.50-62 range.

Hedging advise: USDINR exports hedging can be deferred. Imports can be hedged. EURINR receivables be hedged on spike to 81.50, GBP Exports be hedged.

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