Indian rupee at interim halt

The Indian rupee deprecation had an interim halt with RBI back again with a measure to halt the local currencies slide v/s the US dollar. The USDINR dropped below the 59 mark at the interbank dealing in Mumbai after the measures taken by RBI where it focused on tightening rupee liquidity rather than raising benchmark repo rate.

The Central bank increased Marginal Standing Facility (MSF) rate by 200 basis points to 10.25% and capped the amount banks can borrow from overnight markets to Rs. 75,000 crore. This is aimed to suck liquidity from the system. The central bank also said that it will conduct 0pen market sales of bonds of worth Rs. 12,000 crore to further suck out liquidity from the system. This has pushed the benchmark over 8.2% from almost 7.56% before the measure taken by the bank. Earlier, India’s 10 years G-Sec yield dropped to 7.11% level due to cut in rates by the RBI, while withdraw of funds from the bond market by FII and measures taken by the government has started pushing Yields higher. In the call money market, overnight rates such as MIBOR and call rates jumped above 9% concerning liquidity in the market.

The measures taken by the RBI seems to be an interim fix while we still need to address the structural problem facing the current account front. As per recent trade data, country’s merchandise exports during June fell 4.57% YoY to $23.79 billion signaling a wider CAD number during the first quarter of FY2014 despite imports have slowed. India enjoyed a current account surplus from 2001 till 2004 and from there onwards we are facing deficit in the account. The deficit started rising faster from 2010 breaking the 2% mark and currently hovering around 5-6%. Ceteris paribus, any further rise in the CAD may drain country’s FX reserves.

Till now, India has managed to fund the big CAD by importing foreign investments to local financial markets. However, it looks un-sustainable model as we have to pay a price during uncertainty, when foreign funds move towards safer havens such as US T-bills, Gold or Cash. If the global economy is heading for a crisis like 2008, then it looks vulnerable and it should get discounted to the national currency. However, as of now, the global economy is better off despite some ease off in China and some in Europe. 

Regulation to Rupee at 60 mark

Past three days have been eventful for the Indian FX market with market regulator started punishing market participants for representing the true picture of the economy. First, RBI barred banks to carry out prop trading in currency F&O market and then SEBI raised margin requirements by 100%.

The deprecating Indian rupee displayed the status of our external sector and how vulnerable it is in a global sell off. There has been withdrawal of funds by FII from the debt market and this phenomenon is seen across high yielding emerging nations. In India, this month FII have been net sellers at the bond market after pulling out net $5.7 billion from bonds. As speculation grew, that US Fed to taper with the QE by this year end, US treasury Yield moved higher and yield differential reduced with the high yielding currencies like India, where benchmark yields have been dropping since central banks have started cutting rates.

Indian rupee has dropped below the 60 mark v/s the US dollar, at the time of writing but again resurge back owing to the global phenomenon. Countries like Indonesia have started raining interest as they hiked the benchmark rate by 50 basis point beating market expectations and any such measures will be beneficial for India where we are running a negative real interest rate.

INR trending along with EM Currencies

A little dips is seem coming in USDINR after a sharp rally to 59 marks at the interbank market. Rates are dropping towards the support of 57.30 where possibly fresh surge may emerge.

As observed, the USDINR is decoupling with the dollar index (DXY) which tracks the US dollar performance of US dollar v/s major currencies such as Euro, GBP, and Yen etc.  It is now seen trending along with the direction of EM currencies v/s the US dollar.

Almost all EM currencies such as Korean won, Philippines Peso, South African Rand, Malaysian Ringgit, Thai Baht, Turkish Lira and Indonesia rupiah etc has seen depreciation of their home currencies v/s the US dollar from past few weeks on hopes of Capital account outflows. The cap outflow has started in local currency debt market in Indonesia, Malaysia and Thailand. Apart from that, FII remain as net sellers in EM Asian equities In June till date. The situation may aggravated further………..

v  As US treasury yield continue to rise following expectation of QE tapering by Fed by the end of this year

v  Asian economies are worrying about capital inflows which been flowing from 2009 and now they have given signal to market that they can go to extent of capital control measures. Thailand did first.

v  Export growth slowing in major Asian economies along with slowdown in China, requires their currency to depreciate 

v  Inflation easing across Asia, giving hopes for monetary easing. India, Indonesia Thailand already has cut benchmark rates and continues to do so in the near term brining yield differential lower.

India along with weak external sector compared to other EM nations may continue to see pressure on local currency. It seems USDINR may test 60 while 62 mark is non –deniable

Rupee- Short term trend

The USDINR January contract has been trading sideways since the start of December within a band of 54.50 to 55.60 levels. The market has recently turned bearish after posting a high of 55.60 and currently trading above the crucial support of 54.50.If the level is breached rates may form the second leg of correction and may decline towards 53.70 levels which is almost 100% level of the first leg (the first leg of correction was from 56.33 to 54.50).

The immediate trend is bearish and prices are trading below the trend line resistance of 54.98 levels. As long as rates hold below the level we expect weakness to continue and break below 54.50 could bring in fresh bearish momentum to the market. The daily RSI is sliding and quoting around 0.40 levels suggesting the short term bearish trend is alive. Prices are below the 100 day’s EMA which is pegged around 55.25.

Short term traders can look for selling the USDINR Jan contract around 54.75-54.80 targeting 54.50 and add fresh selling for next target of 54.00-53.70 with stop loss above 55.25.

FX Trades- Sell USDINR 55 Dec Put

After a sharp recovery from a low of 52 towards 56.10 levels, the market started easing off and seen a dip towards 54 levels which is just 50% retracement of the recovery trend. The market has formed a falling wedge and rates have broken the upper trend line of the pattern suggesting a possible upward momentum. Currently, the market is trading below the 10 and 20 day’s EMA level and RSI is neutral around 0.50 levels. 

The major support for the market is around 54 levels and as long as it holds the same, weakness is less likely. The resistance is seen at 55.10 levels.

The formation of falling wedge at intermediate upward trend along with the behavior of market at Fibonacci levels suggest possible recovery.  Recommend buying USDINR Dec future with stop loss below 54 with possible target of 55.10 and then 55.50.

Strategy:  USDINR Dec 55 Put Option: Sell around 0.80-0.90 targeting 0-0.05 with stop loss above 1.15

  

INR today

The Indian rupee is standing around 54.26 today on occasional boost by US dollar and sentiment drive of FDI in multi brand retail. From local markets, the IIP data for October is to be released at 11 PM, expected to read above 5%. In the global markets, everyone is waiting to see outcome of FOMC meeting. The US dollar has declined before the meeting whiles the Euro, GBP gained on expectation of further loosening of monetary policy. Chart suggest further appreciation of the Indian rupee while the level of 54.04 need to break.

Currency traders can look for selling USDINR pairs in the future market with stops above 54.76 levels.

INR Today

The market changed after Mayawati backed UPA on FDI, NIFTY is currently up by almost 25 points after trading down 50 points at the early Asian trading. The Rupee is strengthening v/s the US dollar and quoting at 54.27 at the interbank market. Looks the 54 level will be tested or probably it may move to 53.50.

In global markets, the Euro and GBP is currently down marginally. EURUSD is broadly strong above 1.30 mark and likely to test 1.33 in the short term 

FX Today- Euro may rise to 1.33

The rupee is mostly trading in ranges v/s the US dollar. The key to watch is the voting on FDI due at 5 PM. At the time of writing the spot USDINR is at 54.50 mark, down 0.34%. Clarity in Indian rupee should come in the evening.

Globally, US dollar is seen sliding v/s the Euro and GBP while gaining v/s the Japanese Yen. The US dollar is mixed v/s Asian currencies ex-Japan.

As expected the EURUSD rose above 1.31 mark and likely to find resistance at 1.3140 and breakout above may push it till 1.33 mark. The EURGBP is also on the rise and likely to advance towards 0.8160 levels.

Today’s data to watch

Time		Event	For	Survey	Prior
14:25	GE	PMI Services	Nov F	48	48
14:30	EC	PMI Composite	Nov F	45.8	45.8
14:30	EC	PMI Services	Nov F	45.7	45.7
15:00	UK	PMI Services	Nov	51	50.6
15:30	EC	Euro-Zone Retail Sales (YoY)	Oct	-0.80%	-0.80%
18:45	US	ADP Employment Change	Nov	125K	158K
20:30	US	Factory Orders	Oct	0.00%	4.80%
20:30	US	ISM Non-Manf. Composite	Nov	53.5	54.2

Week in Preview: Forex Traders Eye 5 Central Bank Announcements Next Week

Week in Preview: Forex Traders Eye 5 Central Bank Announcements Next Week

Forex Today- Technicals

Technically, the spot USDINR has a resistance at 54.75 levels and breakout above the same only may bring in notable recovery. Otherwise, it is less likely the pair to recover faster. On the backdrop of positive news from the Euro zone on Greece buying back govt bonds may put downward pressure to USDINR.

The EURUSD is looking promising at 1.3030 and likely to advance towards 1.31 on Intra day.  The EURGBP cross also looking promising while a breakout above 0.8130 is necessary.

The USDJPY retracing back, break below 81.70 will bring in reversal of the uptrend. While, breakout above 82.80 should keep the uptrend alive

Rupee Today

The INR rose to 54.34 today during early inter banking dealing hours.  Much of the rally was supported by strong equities as benchmark indices posted fresh yearly high today. FII inflows have driven local market in recent times. As per data from SEBI, inflows from FII to local equities crossed Rs 1, 00,000 crore mark on Tuesday. It is the second highest inflow in a calendar year ever. As per a report available from BNP paribus, bulk of the FII inflows into India have come from Asia ex Japan and Global Emerging Markets funds – about 55% of total inflows. Despite strong Capital account inflows, the rupee is less likely to see any major reversal of the broader trend as current account remains weak.

………..The Indian GDP data is announced just now with a reading of 5.3%, in line with street expectation. The data is less likely to impact markets as already seen discounted.  From US yesterday, the Q3 GDP came good with a reading of 2.7% despite drop in consumer spending and business investment.

In the global FX market, the Euro and GBP is still strong v/s the US dollar quoting at 1.30 and 1.6045 respectively. Asian currencies were mostly higher today backed by stronger regional equities.

Today, we can expect some swings in USDINR (Spot) with a band of 54.40-54.80 during the remaining hours of the day.

INR around 55

The rupee is now seen appreciating v/s the US dollar after a strong upsurge in local share indices backed by possible FII inflows. As expected the USDINR dropped to 55 mark and currently quoting around 54.98. It is one of the sharpest rise since 2-3 weeks. In the global market, dollar is weak v/s the euro and pound, and against Asian currencies too. Market is waiting to see some good numbers from the US. Looking at the current trend, the rupee may rise to 54.50 levels in next 2-3 sessions.

Source-bloomberg

INR Today

Today, the INR is seen trading positive before the GDP data due tomorrow. The USDINR pair has dropped to 55.37 at the time of writing. It rose as high as 55.88 on 26^th November. Gains in Asian currencies along with firm local stock indices have been pushing the USDINR to retrace back. The GDP data to be released tomorrow is expected to come with a reading of 5.3% and it is already discounted in the market.  Today, we may see moderate appreciation of the Rupee towards 55.00 levels at interbank dealing.

Major data releases today

Time ( IST)	Country	Event	For	Survey	Prior
2:25:00	GE	Unemployment Rate (s.a)	Nov	6.90%	6.90%
15:30	EC	Euro-Zone Indust. Confidence	Nov	-17.1	-18
15:30	EC	Euro-Zone Economic Confidence	Nov	84.5	84.5
15:30	EC	Euro-Zone Consumer Confidence	Nov F	-26.9	-26.9
19:00	US	GDP QoQ (Annualized)	3Q S	2.80%	2.00%
19:00	US	Personal Consumption	3Q S	1.90%	2.00%
19:00	US	GDP Price Index	3Q S	2.80%	2.80%
19:00	US	Core PCE QoQ	3Q S	1.30%	1.30%
19:00	US	Initial Jobless Claims	24-Nov	390K	410K

My View on Aluminium at Financial Chronicle

Oil Reserves may last for 54 years ( BP data)

Country	Reserves as on 2011	% of Total	R/P Ratio
US	30.9	1.9%	10.8
Canada	175.2	10.6%	*
Mexico	11.4	0.7%	10.6
Total North America	217.5	13.2%	41.7
Argentina	2.5	0.2%	11.4
Brazil	15.1	0.9%	18.8
Colombia	2.0	0.1%	5.9
Ecuador	6.2	0.4%	33.2
Peru	1.2	0.1%	22.2
Trinidad & Tobago	0.8	0.1%	16.7
Venezuela	296.5	17.9%	*
Other S. & Cent. America	1.1	0.1%	22.1
Total S. & Cent. America	325.4	19.7%	*
Azerbaijan	7.0	0.4%	20.6
Denmark	0.8	*	10.0
Italy	1.4	0.1%	34.3
Kazakhstan	30.0	1.8%	44.7
Norway	6.9	0.4%	9.2
Romania	0.6	*	18.7
Russian Federation	88.2	5.3%	23.5
Turkmenistan	0.6	W	7.6
United Kingdom	2.8	0.2%	7.0
Uzbekistan	0.6	*	18.9
Other Europe & Eurasia	2.2	0.1%	15.2
Total Europe & Eurasia	141.1	8.5%	22.3
Iran	151.2	9.1%	95.8
Iraq	143.1	8.7%	*
Kuwait	101.5	6.1%	97.0
Oman	5.5	0.3%	16.9
Qatar	24.7	1.5%	39.3
Saudi Arabia	265.4	16.1%	65.2
Syria	2.5	0.2%	20.6
United Arab Emirates	97.8	5.9%	80.7
Yemen	2.7	0.2%	32.0
Other Middle East	0.7	*	37.1
Total Middle East	795.0	48.1%	78.7
Algeria	12.2	0.7%	19.3
Angola	13.5	0.8%	21.2
Chad	1.5	0.1%	36.1
Rep. of Congo (Brazzaville)	1.9	0.1%	18.0
Egypt	4.3	0.3%	16.0
Equatorial Guinea	1.7	0.1%	18.5
Gabon	3.7	0.2%	41.2
Libya	47.1	2.9%	*
Nigeria	37.2	2.3%	41.5
Sudan	6.7	0.4%	40.5
Tunisia	0.4	*	15.0
Other Africa	2.2	0.1%	27.0
Total Africa	132.4	8.0%	41.2
Australia	3.9	0.2%	21.9
Brunei	1.1	0.1%	18.2
China	14.7	0.9%	9.9
India	5.7	0.3%	18.2
Indonesia	4.0	0.2%	11.8
Malaysia	5.9	0.4%	28.0
Thailand	0.4	*	3.5
Vietnam	4.4	0.3%	36.7
Other Asia Pacific	1.1	0.1%	10.4
Total Asia Pacific	41.3	2.5%	14.0
Total World	1652.6		54.2

Proved reserves of oil - Generally taken to be those quantities that geological and engineering information indicates with reasonable certainty can be recovered in the future from known reservoirs under existing economic and operating conditions.

Reserves-to-production (R/P) ratio - If the reserves remaining at the end of any year are divided by the production in that year, the result is the length of time that those remaining reserves would last if production were to continue at that rate.                     

Source- BP Worldwide