USD/INR OUTLOOK

  • In the last one month USD/INR tested a high of 68.87 on 24th November which also is the all-time high for USD against INR.At this level RBI intervened aggressively and contained the volatility as well as well as the Rupee fall.
  • On 8th December Rupee hit a high of 67.32 against USD from its recent lows of 68.87.
  •  We mentioned in our recent reports that although Rupee has appreciated to 67.32 almost 2 % against USD from its recent lows of 68.87  its likely to weaken again in the near term.
  • USD/INR hit a high of 68.07 on 20th December and trades at 67.94 at the time of writing
  • We believe Rupee is still overvalued on REER basis and can weaken further in the coming days.
  • For the next two weeks we have holiday season and market volume will be thin .USD/INR is expected to trade between 67.50 and 68.50 for the next two weeks.
  • From mid-January USD/INR volatility will be back as market will be dealing with domestic earnings, demonetization result/fallout, GST roll out date, upcoming
    Indian budget, Italy’s underwriting their banking sector. Market would also focus on continuation of dollar strength against majors and rising US bond yields.
  • Rupee appreciation is expected to be capped at 67 for the near term whereas if 68.85 is taken out again for two continuous trading sessions it may test 70 level against USD.
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