Dollar index continues to move sideways, a weekly close
below 96 should signal the start of a downtrend, but it could be some time (perhaps
not before 24th August Jackson hole) before that happens. Chinese
retails sales and GDP data yesterday calmed fears of a higher than expected
slowdown in China.
USDINR continues to trade in a tight range as debt inflows
(both FPI and corporate borrowings) seem to be absorbed by nationalized banks. India
10y bonds have rallied by 35 bps to 6.36% now since the budget and there could
be some more room left for the rally to continue. Indian equity markets
continue to show resilience in spite of slowing growth. The trade balance of
$15bn deficit was near expected lines. The medium term view remains of USDINR
heading towards 67 by September end. A daily close above 68.95 should call for
stops on this view. CMP 68.55, range for the day 68.68-68.40. We could see
68.30 breaking this week as news reports suggest a quite a few inflows in the near
term.
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