Rupee - Currency Update - Dec 15, 2020 - Reliance Securities

The Indian Rupee appreciated against the U.S. currency supported by foreign portfolio flows and a weak U.S. dollar.

The Rupee ended at 73.58 to the dollar compared with 73.65 on Friday.

The Dollar index was down by almost 0.5% at 90.55 this Monday afternoon trade, hovering near its lowest level since April 2018.

Most if the non-dollar currencies were stronger against the U.S Dollar primarily on the back of a possibility of a Brexit deal.

Asian currencies were mixed but Chinese Yuan was stronger against the Dollar on optimism on growth amid vaccine rollouts in developed nations.

The Federal Reserve will come out with its monetary policy review on Wednesday. We believe that the U.S. Fed could provide fresh hints toward adjustments in the asset purchase program and could weigh on the greenback.

The one-year forward premium was at 3.20 rupees against 3.16 rupees in the previous session.

Meanwhile, data showed that retail inflation rate in November stood at 6.93%, the pace easing from 7.61% in the previous month.

Wholesale prices rose 1.55% on year in November, lagging a median forecast of a 1.62% annual expansion according to a Reuters poll of economists, but faster than previous month's 1.48% rise.

The benchmark BSE Sensex and the broader NSE index gained 0.34% and 0.33%, respectively on Monday.

The benchmark 5.77% bond maturing in 2030 ended at 98.71 rupees, yielding 5.95%, against 98.64 rupees, yielding 5.96%, at previous close.

FPI ACTIVITY

FPI bought net $1.02 billion as on 11 December 2020.

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

For the month of December, FPI were net buyers of a total of $4.763 billion.

From the month of March 2020 FPI were net buyers of a total of $9.653 billion.

The Dollar ended near two-year lows on Monday as riskier currencies got a boost from progress on COVID-19 vaccines and the possibility of a U.S. coronavirus relief plan.

The Euro rose against the U.S. Dollar on Monday on broad Greenback weakness.

The Sterling also ended with gains against the U.S. Dollar on Monday after Britain and the European Union extended discussions on a post-Brexit trade deal beyond the previous day's deadline.

The Japanese Yen ended weak against the U.S. Dollar on Monday.

OUTLOOK - DOMESTIC & INTERNATIONAL CURRENCY

The Indian Rupee could start this Tuesday on a flat note against the U.S. Dollar, However, weak U.S Dollar could continue to lend support to the currency.

Asian currencies were weak this Tuesday morning and could cap gains for the domestic unit.

The Rupee could likely open around 73.58-60 per dollar compared with 73.58 at close on Monday. The Rupee's trend for the day is range bound.

Meanwhile, NDF is at 73.64/64 this Tuesday morning vs a close of 73.6411 on Monday.

Technically, USDINR Spot is holding a strong support near 73.40 levels below which could see a downside pressure up to 73.28-73.15 levels.

However rebound above 73.66 levels could see an upside push up to 73.75-73.90 levels.

USDINR Spot is expected to trade in a range of 73.28-73.70 levels.

US Dollar Index was trading weaker this Tuesday morning in Asian trade ahead of the Federal Reserve meeting this week and as demand for the safest assets remained weak amid progress toward agreeing U.S. fiscal stimulus and optimism for a Brexit deal.

The Euro was higher against the U.S. Dollar this Tuesday morning in Asian trade on broad Greenback weakness.

The Sterling rose against the dollar this Tuesday morning in Asian trade amid extension of Brexit talks.

The Japanese Yen was marginally weak against the U.S. Dollar this Tuesday morning.

Source : Equity Bulls

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