|Currency Pairs||WEEKLY CLOSE||PRIOR WEEK CLOSE||% change|
Brent Crude closed at USD 63.10 VS prior week close of USD 64.75. Gold closed at USD 1743.Nifty closed at 14834 vs prior week close of 14867. 10 Year G-SEC Yield closed at 6.01%.
Major developments: USDINR traded in the 73.21-74.97 range and closed at 74.74 as against the prior week close of 73.11. The rupee declined 2.2% w/w. EUR and GBP climbed 2.45% and 1.6% respectively against Rupee. Indian benchmark Equity index declined 0.22% w/w. 10 Year G-SEC Yield closed at 6.01%.
Rupee’s decline accelerated after year-end close at 73.11. RBI’S dovish monetary policy, rising corona infections and USD’S gains against majors in Q1 contributed to overall Rupee fall. Stop-loss buying was triggered past 73.78 (3 month’s high).
RBI maintained status quo on rates. Repo was left unchanged at 4%. RBI maintained an accommodative stance and expects GDP to climb by 10.5% in 2022. RBI’s decision to buy Rs 1 lac Cr worth of G-SEC’S weighed down on yields. 10 Year G-SEC yield declined to 6% from almost 6.25%. USDINR fwd premia also fell in tandem with 1 year premia declining from 5.35% to 4.5% p.a.
Indian IIP and CPI data are awaited. IMF has projected Indian growth at 12.5% for this year. However, rising infections and possibility of regional lockdowns are causes of concern.
In April till date, FII’S have sold Rs 1536 Cr worth of Indian Equities and have bought Rs 1129 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. In FY 19-20, FII’s sold Rs 10200 Cr of Equities and 47393 cr of debt.
USDINR is expected to trade in 73.80-74.95 range for some more time. An upside break of 74.97 could herald a fresh wave of Rupee selling to 75.50.
Global developments: Euro recovered partially from Q1 losses as new economic data suggests that business is adapting to live with the virus. US Equities climbed higher as US President has proposed a new infrastructure plan. Fed Chief has also allayed fears of early rate hikes. US ISM data was robust and reflects optimism as cases decline.
IMF upgraded growth forecast for the advanced economy and the whole world in 2021. Global output growth forecast is raised by 0.5% to 6.0% in 2021, and by 0.2% to 4.4% in 2022. US growth is upgraded by 0.8% to 5.1% in 2021, and by 0.5% to 3.6% in 2022. Eurozone growth was raised slightly by 0.2% to 4.4% in 2021, and by 0.2% to 3.8% in 2022. Indian growth is expected to be 12.5% in 2021.
Fed minutes reiterated its commitment to keep interest rates low until the U.S. economy makes a more secure recovery.
U.S. Federal Reserve Chairman Jerome Powell signaled on Thursday the central bank is nowhere near reducing its support for the U.S. economy.
The focus will be US retail sales.
Currency range forecast: USDINR:73.80(support)-75/75.
Suggestion: Cover USD import payables on a decline to 74. USD receivables can be hedged at 74.90/75.50. EURINR receivables can be hedged on a rally to 89+. GBPINR receivables hedging can be done at around 102.50/103.50.
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