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Rupee Depreciates as RBI Minutes Raise Concerns for Growth - HDFC Securities
* Rupee depreciates as RBI lowers growth prospectus for the coming years. Local currency started 12 paise weaker to 71.67 a dollar.
* RBI minutes highlighted concern about weakening economic growth, and expressed hope for a recovery driven by faster transmission of RBI’s policy easing. Most members observed that the output gap has widened further since the June policy review.
* RBI revised down its growth projection for fiscal 2020 to 6.9% at its Aug. 7 review, from 7% prior. MPC recently cut our growth forecast to 6.6%, from 7% earlier. They expect a negative growth surprise would see the RBI ease further.
* Technically, USDINR August futures hold the support at 70.90 while resist around 72.14.
* Benchmark 10-year yield fell 2bps Wednesday to 6.57%. The yields have risen this month amid concerns over likely extra borrowing by the government to fund any possible fiscal stimulus.
* Global funds sold net 7.71b rupees of local stocks, sold 1.3b rupees of govt. bonds and bought 620m rupees of corporate debt.
* India’s direct tax collections have grown by less than 5% in the fiscal year that began April 1 because of the slowdown in the economy.
* ICE dollar index held gains on Thursday after minutes from the Federal Reserve’s last policy meeting hosed down some aggressive expectations the central bank would embark on a series of deep interest rate cuts. The minutes from the Federal Reserve’s July meeting showed that most officials viewed last month’s rate cut as insurance.
USDINR AUG FUT. TECHNICAL OUTLOOK
USDINR AUGUST FUT. :
USDINR August futures have been consolidating between 70.90 to 71.56 since four days.
The pair is having the Doji candle indicating indecisiveness.
Momentum oscillators, RSI exiting from the overbought zone indicating short term profit booking.
The pair likely to see some profit booking with downside support around 70.90
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HDFC Securities Limited (HSL) is a SEBI Registered Research Analyst having registration no. INH000002475
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