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USD/INR

Exporters: Hedge 2-m @ 81.20/30

Importers: Hedge 2-m @ 80.10/20

15.11.22 OPEN 81.13 HIGH 81.4425 LOW 81.05 CLOSE 81.0950

We have seen big swings in the pair in a wide range of more than 1%. Fall to 80.50, mainly driven by the DXY fall and happening in offshore trades, brought in hordes of buying from domestic players on Monday including traders who were booking profits on their Dollar shorts. However, the move extended much beyond our own expectation due to more short covering and panic buying from some importers as the rate opened higher yesterday, taking the rate close to important resistance at 81.50.

But that level proved as attractive to the Dollar bears as the lower levels and the pent up selling and exporter hedging which had missed out earlier took advantage of the rally and we saw an intraday fall of more than 0.5% (spot trading below 81 again). Continued drop in the Dollar against major currencies as well as the big strength seen in Chinese currency could not be ignored by the market.

OUTLOOK

Rupee had a big bout of strength recently helped by the Dollar Index falling by more than 9% from the highs, but the negative sentiment towards the currency continues. Yesterday’s trade data confirms the concerns on external sector continuing and without matching flows to fund the same, the underlying trend for the Rupee is likely to stay one of weakness.

However, temporary relief for the rupee may continue as there would be bunched up inflows which have been held back during the last several months, thus ensuring that the recent high of 83 plus for the currency remains safe, barring any fresh global negative. On the downside, psychological level of 80 is expected to lend good support.

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