Summary: Rupee Future started the week with strength but declined to 48.9 in the middle and finally closed at 0.05 paisa higher from the last week thanks to positive sentiment in India equity market. With SENSEX holding onto gains, downward pressure should remain on the USD/INR going forward. Firm benchmark yield is also supportive to the local currency.
Market Analysis: Rupee future ended at 48.7050 up marginally during the week. Major movement was seen in GBP/INR pair that ended down 2.88% from 71.8253 to 69.7870 as British pound declined against all major currencies. Rupee declined during the middle of the week on back of lower IPP numbers released. However, the firm SENSEX closing towards the end of week supported the local currency. Pessimistic sentiment prevailed about future trend in FDI and FII flow into the country. HSBC predicted Rupee to touch as low as 54 per dollar by the year end as the bank see Rupee’s remarkable stability in recent weeks to last soon and may weaken past 50 per dollar quickly as foreign direct investment (FDI) and remittances may fall sharply. The benchmark JP Morgan Asia Dollar Index was seen down by 0.80% due to sluggish export numbers announced by key Asian countries and weak Asian equity market as reflected in MSCI Pacific Index that ended down 2% from the earlier week.
Technical Analysis: Range bound in the broader 48.55-49.15 band likely to continue as the pair is still sentiment driven.
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