FX – WEEKLY SYNOPSIS

WEEKLY SYNOPSIS (11/01/19)

Currency Pairs WEEKLY CLOSE PRIOR WEEK CLOSE % change
EUR/INR             81.21     79.25 2.47
GBP/INR 90.16 88.53 1.84
JPY/INR 0.6493 0.6424 1.07
USD/INR 70.49 69.73 1.08

 

Major highlights: Rupee declined 1.08% w/w  to close at 70.49 on 11/1. Volatility is subsiding.

Indian Equity indices traded in a narrow range and indecisively. Bond yields traded steady.

-Rupee declined despite USD’S fall against majors. Rally in Brent Crude price from USD 53 to USD 60 may have ushered covering of imports.

-IIP grew only by 0.5% in Nov as against 8.4% in Oct 2018. Mfrg contracted 0.4%. This could be attributed to high base effect and seasonal reasons. Indian GDP is poised to grow at 7.4% this Year. 

-Lower inflation and sagging IIP data could prompt RBI to cut rates by 25 bps in Feb meeting.

-Focus is on Feb 1 st Union budget. Since this is an election year budget, there is increased expectation of tax reliefs and additional benefits to farm sector.

-FII’S have sold Rs 1673 Cr of Indian Equities in Jan till date . FII’S have sold Rs 535 Cr of 

Indian debt securities in Jan till date . 

-Crude climbed last week. WTI Crude is now at USD 51.70 and Brent Crude is now at USD 60.55. Gold rallied significantly.

-Global Equities led by US recovered on hopes of US-China trade resolution and Fed Chairman’s statement that Fed could be flexible and patient in further rate hikes.

-US Treasury yield differential widened. US Govt shutdown continued.

-UK’S Brexit vote is taking place on Tuesday.

Next week important events: US retail sales, EU CPI, BRexit vote and Indian CPI.

Projected range for coming week: USDINR: 69.20-71, EURINR:80.50-82.50, GBPINR:88.50-92.50, JPYINR: 0.64-0.66

Suggestions: Hedge USD receivables on rally to 71. USD payables can be hedged on decline 

below 70. 

EURINR payables can be hedged at 80.50.

 

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