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RUPEE ADVANCES AHEAD OF G20 MEETS - HDFC Securities
* Indian Rupee advances amid fund inflows in bond market that offer one of the highest yields in the region. Global funds bought a net $80.8 million of rupee debt on June 21. The carry/volatility ratio has been quoting around 1.59 for 1 month forwards which is highest among other Asian currencies.
* The 12-month implied yields on rupee forwards, which reflect interest-rate differentials between India and the U.S., surged to near a two-year high this month even after the Reserve Bank of India cut interest rates for a third time this year. The 12-month implied yield on the forwards rose 51 basis points in June to 4.50%. This is due to the advance tax payment and RBI’s forex swap.
* The central bank panel would only make its recommendations on the transfer of reserves to the government next month. That surprised market which were pricing in as much as a 3 trillion rupee ($43 billion) this month.
* Market is expecting big swings in emerging-market currencies as volatility shows their biggest jump this month ahead of U.S.-China trade planned meet in G20. The JPMorgan EM implied volatility index for emerging market currencies rose 1.1%.
* The euro rose to a three-month high on conviction that the Federal Reserve’s ability to cut borrowing costs more quickly than the European Central Bank will hurt the dollar.
* The pound slipped as the front runner for the next prime minister faces mounting pressure to submit to more public scrutiny. Mr. Johnson said UK will come out of the EU on 31 October.
USDINR JUNE FUT. TECHNICAL OUTLOOK
USDINR JUNE FUT. : USDINR June
futures fell below short term moving averages. Momentum oscillator, RSI of 14 days period given negative cross over and reversing from center line.
Near term bias turning bearish with downside support around 69.20 and resistance at 70.05.
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HDFC Securities Limited (HSL) is a SEBI Registered Research Analyst having registration no. INH000002475
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