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
