Indian Rupee against USD By Mr. Hitesh Jain, YES Securities India Ltd
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Below on the Indian Rupee against USD By Mr. Hitesh Jain, Strategist, Institutional Equities Research at YES Securities India Ltd
“We think the downside in the Indian Rupee is restricted given the RBI's persistent FX intervention around the 83 mark. Moreover, we infer that the RBI will likely roll over the US$5bn Dollar swaps which are due to mature next week. The central bank would like to arrest the injection of rupee liquidity (RS 40,000 crores) emanating from the maturity of Dollar swaps. RBI has persistently emphasized the inflationary impacts of a surplus liquidity in the banking system. Also, there has been relative inaction in the general dollar index throughout October despite rising US Treasury Yields. This tells us that the Fed will likely not raise rates further given that the bond markets are already doing the job of tightening financial conditions. Consequentially, Bulls will not flock to the Greenback, anticipating the US Fed to admit that the current rate is the terminal rate at some point in time, while several Fed governors have already hinted along these lines.”
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