Trade tensions abated with news of US talking with China, Canada and EU. Brexit deal related optimism prevented dollar index from breaking 200WMA at 95.56 yet again. A weekly closing above 95.56 should ensure that the dollar index heads to 97 levels.
Indian policy makers all this while attempted to play down concerns on depreciating Rupee by suggesting that the same is because of external factors and therefore is not too much of a worry. This was interpreted by the markets as a free hand to go long in USDINR. Yesterday the policy makers realized the duality of the argument and expressed worry on depreciating Rupee. It is unlikely that the government would be able to come out with some measure immediately as brainstorming and execution would take some time. On the other hand the government would want to see the effect of its verbal intervention yesterday and perhaps would look to implement new policy only at the break of 73. In other words there seems to be room for 73 albeit with policy risk.
USDINR 1m NDF is 12.5 p right as compared to 10p yesterday. EM currencies have not registered moderate appreciation since yesterday. FII flows continue to be negative as debt outflows have picked up in September. Oil is at elevated levels of 77.52. CMP 72.36, Range 72.20-72.55.
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