INR TOUCHES 3-WEEK HIGH ON POSITIVE ECONOMIC DATA

THE WEEK THAT WAS...

•  Indian Rupee continued its winning streak and hit a three week high last Friday. The local currency closed with a gain of 0.57% last week against the US dollar. Gains were seen mostly on the back of better than expected economic data like WPI and CPI. Above all, positive CAD for January makes Rupee relatively better currency in the EM pack. Rupee’s out-performance continued on the back of positive domestic as well as Asian stocks and weak economic data out of the US. But month-end dollar demand by Oil Importers, coupled with their repayment of swap dues to RBI on or before 31st May will likely keep Rupee under some pressure. Markets are looking forward to a pragmatic interim budget from the Finance Minister on Monday.
•  US Dollar lost ground against most major world currencies on Friday amid mixed US economic data on industrial production and consumer sentiment. Chinese inflation data boosted the Aussie and the Euro advanced amid a report showing pick-up in Eurozone economic recovery. The US markets will be closed on Monday in observance of Presidents Day.

CURRENCY OUTLOOK FOR THIS WEEK

 Indian Rupee is likely to trade with a positive bias for the week on the back of strong economic data released last week. US markets will remain shut on Monday on account of US presidents day. So, trading in Indian currency markets will be slightly subdued on Monday and the rupee could trade range bound

CURRENCY INSIGHTS

• Declining US bond yields are seen as positive for the rupee amid lingering fears that the impending QE tapering could result in outflows of foreign capital from the Emerging Markets.
•  As per charts, USDINR saw a breakdown on Friday but was not able to sustain. Also, currently USDINR is trading below short-term moving average, pointing to some marginal weakness in the local unit in coming sessions. The currency has to breach 60.90 in spot to continue its southward journey towards 60 and below.
•  For the coming week, USDINR is likely to trade in a range of 63.00-61.00 in spot market

CURRENCY OUTLOOK FOR THE DAY

•  Rupee is likely to trade with a positive bias on the back of weak USD and positive local equity markets. Positive trend in Euro and Pound will likely keep USD under pressure against the rupee.
•  In the spot market, USDINR is likely to open lower at 61.80 versus the closing of 61.93 on Friday. USDINR February futures are likely to open at 62.00 versus Friday’s closing of 62.10.

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