Currency Report for Exporters and Importers :21st August 2018

Insignia Consultants

New Delhi

Tuesday, August 21, 2018

TIME: 9:05 am IST          

DAILY FOREX REPORT FOR EXPORTERS AND IMPORTERS

(inter-bank prices below)

Weakness in the US dollar picked up after Trump said that he does not like the Federal Reserve to raise interest rates. Only expectation of continued interest rate hike by Federal Reserve is supporting the US dollar. Fundamentally the US dollar is bullish. The pace of rise of US dollar should have been slower. FOMC minutes tomorrow and Jackson hole conference of central bankers will be affect the US dollar. Traders will prefer to short the US dollar before the Jackson hole conference in light of Trump’s comments on US interest rate hikes. Tomorrow most of Asia is closed due to “bakri eid”. Trading volumes will be very thin in currency markets tomorrow.

India

Foreign institutional investors are investing in Indian stock markets. Over the past few years inflows and outflows from the Indian bond market has been a bigger contributor to rupee direction than FII investment in Indian stock markets. Unless US bond yields zoom and US dollar gains significantly rupee could consolidate in wider 68.50-70.50 wider trading band. There will be demand at lower levels as importers fear a rise anytime. September is a pre festival month. Import demand will be very high next month. Half yearly close will also contribute to demand. If US dollar supplies does not increase next month and the US dollar gains simultaneously, then Indian importers will be scurrying for cover. Six months down the line, rupee should fall to 67.00 and below unless crude oil spikes. Hedging for exporters even at current price for six months and over in Usd/inr is safer bet.

US dollar-Indian Rupee (usd/inr CMP 69.6750):

One Support: 69.4450
One Resistance: 69.9225

o      Rupee needs to trade over 69.4450 to rise to 69.9225 and 70.1950.

o      There will be sellers on rise as long as 69.9225 is not broken.

o      Crash will be there below 69.2750.

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FAQ

Why Do I ask exporters and importers to use trailing stop loss? Some day’s currency markets are very volatile. Trend (short term as well as medium term) change at the flick of coin without any advance warning. In order to make the most of the volatility it is preferable to use trailing stop loss using technical analysis as basis. Those exporters and importers do not wish to take the risk, should take a forward cover or hedge in future and options market if export or import price near cost.

Disclaimer: Any opinions as to the commentary, market information, and future direction of prices of specific currencies, crypto currency, metals and commodities reflect the views of the individual analyst, In no event shall Insignia Consultants or its employees have any liability for any losses incurred in connection with any decision made, action or inaction taken by any party in reliance upon the information provided in this material; or in any delays, inaccuracies, errors in, or omissions of Information. Nothing in this article is, or should be construed as, investment advice. Prepared by Chintan Karnani

NOTES TO THE ABOVE REPORT

PLEASE NOTE: HOLDS MEANS HOLDS ON DAILY CLOSING BASIS

ALL PRICES ARE IN INDIAN RUPEE UNLESS OTHERWISE SPECIFIED

Indian Standard Time (IST): +5:30 GMT

Current Market Price (CMP)

All foreign exchange prices are for inter-bank rates.