Currency Map:

USD/INR 73.50 73.02 0.65
EUR/INR 87.12 86.76 0.41
GBP/INR 101.49 101.06 0.42
JPY/INR 66.94 66.40 0.81

Brent Crude closed at USD 73.25 VS prior week close of USD 73. Gold closed at USD 1787.Nifty closed at 17369 vs prior week close of 17323. 10 Year G-SEC Yield closed at 6.17%.

Major developments: USDINR traded in the 73.02-73.86 range and closed at 73.50 as against prior week close of 73.02. Rupee declined 0.65% w/w. EUR climbed 0.41% and GBP climbed 0.42% w/w against Rupee. Indian benchmark Equity index climbed 0.26% w/w. 10 Year G-SEC Yield closed at 6.17%. 1 year fwd premia is at 4.28% p.a.

USDINR had a v shaped recovery and climbed steeply to 73.85. In Sept, there are 13 IPO’S and inflows are likely to be strong. USD has also steadied post NFP. EM Currencies steep decline also contributed to Rupee weakness last week. CPI and IIP are due for release on Monday.

In Sept, FII’S have net bought Rs 236 cr in Equity segment and have net bought Rs 1310 cr of debt. In this financial year, FII’S have net sold Rs 2139 Cr worth of Indian Equities and have bought Rs 9175 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: Global data was thin last week. ECB meeting was the focus event. ECB took the decision of ending front loading of PEPP asset purchases and acknowledged inflationary pressure. ECB Chief said that this is not tapering and added that the economy is still not out of problems. On the economic developments, Lagarde reiterated that risks for the economic outlook were “broadly balanced” and “price pressures are building only slowly”. She added that “there remains some way to go before the damage done to the economy by the pandemic is undone”. The central bank upgraded GDP growth forecast to +5% y/y from this year, while keeping projections broadly unchanged for 2022 and 2023.

UK GDP grew just 0.1% mom in July, below expectation of 0.5% mom. Overall, the economy remains -2.1% below its pre-pandemic level in February 2020.

Eurozone GDP grew 2.2% qoq in Q2, revised up from prior estimate of 2.0% qoq. Comparing with same quarter of previous year, GDP grew 14.3% yoy.

Japanese GDP growth was finalized at 0.5% qoq, 1.9% annualized in Q2. It’s upgraded from initial estimate of 0.3% qoq, 1.3% annualized. 

US CPI and retail sales are the focus events for this week.

Currency range forecast: USDINR: 73.30(support)-74.85(Resistance), EURINR: 86.35(support), 87.50(Resistance), GBPINR: 100.40.(support), 102.25- Resistance, JPYINR: 66-68.50.                         

Suggestion: Cover USD import payables on dips to 73.30/73. Receivables can be covered on spike to 73.70. EURINR receivables can be hedged closer to 87.25. GBPINR receivables hedging can be done at around 102.

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