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Currency Outlook

Rupee Outlook

* Rupee depreciated on Tuesday and went past the 83.40 mark amid weak Asian peers and higher crude oil prices. Meanwhile, open interest on dollar-rupee April month futures fell after brokers informed their clients of an RBI notification that would require that positions in rupee contracts can only be taken against contracted exposures.

* USDINR is expected to move towards the lower band of the consolidation range 83.30-83.55 amid correction in the dollar. Growing support for three rate cuts by the Fed members amid mixed US economic numbers could check the upside in the dollar. Moreover, higher forex reserves and better than expected domestic economic numbers would support the rupee to move towards 83.30. So we expect rupee to move in a very tight range of 83.30-83.55. Only a move below 83.30 it would slide towards 83.20.

Euro and Pound Outlook

* Euro rebounded from its one month lows amid upward revision in the March manufacturing PMI data. Further, correction in the dollar index also supported the pair to regain its strength. EURUSD is expected to find support near 1.0720 and move higher towards 1.080 on expectation of sticky inflation numbers. EURINR April is likely to find support near 89.50 and move towards 90.20. Only move below 89.50 it would turn weaker.

* Pound recovered from its 6-week low on Tuesday amid softness in the dollar and improved manufacturing activity in UK. Manufacturing sector showed sign of growth in March as output and new orders increased following year-long. The pair is expected to hold support near 1.2520 and rebound towards 1.26 amid improved risk sentiments. GBPINR April is likely move towards 105.20 as long as it holds support of 104.50. Only a move below 104.50 it would slip towards 104.20 level.

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