Usd/Inr (Spot/Inter-bank) Current price: 68.6375
Key support: 67.2175 / Key resistances: 70.0750
Immediate resistance: 69.1025 / Immediate support: 68.0175
Only a weaker US dollar can result in gains for
the rupee against the US dollar. Indian economy is slowing. Demand for consumer
durables was lower in June partly due to weak monsoon and a weak economy. Food
price inflation will rise if monsoon rains in July are below normal. The
government is focused on privatizing everything be railways, selling of so
called navratnas etc. Managing fiscal deficit will not be an issue in the
current fiscal year. Petrol and diesel cess will add over Rs.20,000 crore to
the government’s kitty alone. Higher tax compliance will increase government’s
revenue even if the economy slows for the rest of year.
In the
short term foreign investors can withdraw from India. In the medium term to
long term, they will invest in India more than expectation. Inflows in equities
and bonds should be on the higher side of the expectation curve from August.
Interest rate cuts (if any) by the Federal Reserve will widen the interest rate
differential and can also result in more investment in Indian bonds.
Risk for the rupee are (1) Sustained global
recession arising out of US induced trade war. (2) Energy price rise. (3)
Government hits the axe in its foot and increases indirect taxes for the common
man. Since 2014 ever since NDA under Modiji came to power, all kinds as
indirect taxes are rising in every budget. The aam aadmi cannot bear any
further increases in indirect taxes.
Technically speaking: (a) 100 week moving
average at 68.0175 is the immediate support with 200 week MA at 67.2175 as long
as the key long term support.
The threshold or worry is rupee trading over
70.0000 against the US dollar over the next thirty days. As long as usd/inr
does not break 70.0000 it will fall to 67.2175.
At the current price usd/inr can swing one
hundred and fifty paisa either side anytime. Exporter and importers both need
to remain on the sidelines. Sharp dips should be used to hedge quarter end
payables. Rupee will sink only if fundamentals dictate price moves for over
seven trading sessions.
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.
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