Currency Map:

USD/INR 74.89 75.26 -0.49
EUR/INR 87.01 87.32 -0.35
GBP/INR 103.15 103.02  0.12
JPY/INR 65.63 66.33 -1.05

Brent Crude closed at USD 85.72 VS prior week close of USD 84.85. Gold closed at USD 1793.Nifty closed at 18114 vs prior week close of 18338. 10 Year G-SEC Yield closed at 6.35%.

Major developments: USDINR traded in the 74.70-75.39 range and closed at 74.89 as against prior week close of 75.26. Rupee gained 0.49% w/w. EUR declined 0.35% and GBP climbed 0.12% w/w against Rupee. Indian benchmark Equity index declined 1.22% w/w. 10 Year G-SEC Yield closed at 6.35%. 1 year fwd premia is at 4.47% p.a. FX reserves is at USD 641 bn as on 22/10.

USDINR softened from 75.68 on bond related inflows. Rupee gained to 74.70. However, there seems to be buying interest at around 74.70. Downside break could help Rupee gain to 74.30. Expect 73.90-75.70 to be the new range for the pair. Crude price rally is a major negative for Rupee.

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: Focus was on Yield rally. US 10 Year yield spiked to 1.7%.  Despite Yield rally, investors concentrated their attention on strong corporate earnings, which indicated that American companies were able to avoid an erosion of profit margins by passing at least a portion of price increases onto consumers. Crude price rally remains unabated. US Spending and CORE PCE data are the important data events in the coming week.                                                                                                     

Currency range forecast: USDINR: 74.70(support)-75.68(Resistance), EURINR: 86.70/85.75(support), 87.50(Resistance), GBPINR: 101.50.(support), 104- 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 87.25+. GBPINR receivables hedging can be done at around 103.50+.  

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