Currency Update - December 02, 2020 - Reliance Securities

The Indian Rupee appreciated against the U.S. Dollar this Tuesday supported by inflows into the domestic equity markets and absence of the central bank from the market.

Persistent dollar sales by foreign banks, weak U.S. Dollar and upbeat risk appetite in Asia further contributed to the currency's gains this Tuesday.

The Rupee ended at 73.68 to the dollar compared with 74.05 in the previous session.

Briefly the currency had risen to 73.44 earlier in the session, the highest since Oct. 21.

The key triggers for the market this month will be RBI's monetary policy meeting this week and the FOMC meeting this month.

The one-year forward premium was at 3.19 rupees against 3.15 rupees in the previous session.

The benchmark BSE Sensex and the broader NSE index ended at record highs after rising 1.15% and 1.08%, respectively on Tuesday.

The benchmark 5.77% bond maturing in 2030 ended at 98.82 rupees, yielding 5.93% against 98.96 rupees and 5.91% yield at previous close.

FPI ACTIVITY

FPI bought net $1.152 billion as on 27 November 2020. For the month of November, FPI were net buyers of a total of $9.762 billion.

The data presented below constitutes trades conducted by FPIs/FIIs upto the previous trading day.

The Dollar crashed on Tuesday to its lowest level in more than 2-1/2 years, as investors' appetite for risk increased on prospects of further fiscal stimulus from the United States as well as expectations of a solid global recovery.

News of a proposed COVID bill sank the dollar further, as did the resumption of talks between U.S. Treasury Secretary Steve Mnuchin and House of Representatives Speaker Nancy Pelosi on Tuesday about a stimulus package.

The proposed relief bill of $908 billion would fund measures through March 31, including $228 billion in additional pay check protection funds for hotels, restaurants and other small businesses.

The Euro and the Sterling rose against the U.S. Dollar on Tuesday, while the Yen ended flat against the U.S. Dollar on Tuesday.

Outlook - Domestic & International Currency

The Indian Rupee could start this Wednesday on a strong note against the U.S. Dollar, after the Greenback took a tumble on Tuesday's session as investor appetite for risk increased on the prospects of further fiscal stimulus from the United States.

The Rupee could likely open around 73.50-73.52 per dollar compared with 73.68 at close on Tuesday.

Meanwhile, NDF is at 73.50/73.51 this Wednesday morning vs a close of 73.38 on Tuesday.

Markets will now await the conclusion of the RBI monetary policy meeting.

Technically, USDINR Spot pair has bounced back from $73.44 levels but is still sustaining below 50-Daily Moving Average (DMA) at 73.84 levels indicating Bearish sentiment to continue below the DMA.

Support is at 73.50-73.73.19 levels. Resistance is at 73.75-73.95 levels.

USDINR Spot pair is expected to trade in a range of 73.30-73.85 levels.

US Dollar Index was flat to marginally weaker against the basket of currencies this Wednesday morning in Asian trade amid talks of possibility of more U.S. fiscal support.

Federal Reserve Chair Jerome Powell highlighted challenges of production and mass distribution before the economic impact of a vaccine becomes clear.

The Euro and the Sterling were trading flat to marginally lower against the U.S. Dollar this Wednesday morning in Asian trade.

The Japanese Yen was flat against the U.S. Dollar this Wednesday morning.

Source : Equity Bulls

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