Upward reversal in GBP-INR futures

Rupee was stuck in a narrow band between 44.4 and 44.6 against the dollar over the past week. Demand for dollars from importers and exporters selling dollars ensured that pressure was maintained in both directions on the Indian currency. One-month forwards in the non-deliverable forwards market are trading at 44.7 while three-month forwards are trading at 45 denoting a downward bias.

Things were subdued in international forex markets ahead of the emergency euro zone meeting scheduled for Thursday. German Chancellor, Ms Angela Merkel, has however ruled out a firm solution to the Greek crisis in this meeting. The dollar index was also range-bound over the past week. We stay with the view that a strong close above 76.3 is required to make the medium-term view positive for this index.

Dollar-Rupee outlook

The dollar-rupee pair did not decline below the key near-term support at 44.7 but it did not rally sharply either and remained range-bound between 44.4 and 44.6. The currency pair will face hurdle at 44.44 and then 44.41 in immediate future. Rally beyond this zone will take the currency to the recent peak at 44.3.

Near-term view stays positive as long as the currency trades above 44.7. This view will deteriorate only on breach of this level paving the way for further decline to 45 or 45.4.

As we have been reiterating, the long as well as medium-term trend in the rupee are currently up. But the strong resistance at 44 is making this pair stay in the range between 44 and 47 over a protracted period.

USD-INR futures

USD-INR futures could not strengthen beyond 44.82 and the contract instead declined to 44.5 on Wednesday. The contract has support at 44.4 and traders should watch out for a rebound from this level. Targets in that event would be 44.65 and 44.74 and 44.87.

Short-term supports will be at 44.4, 44.26 and 44.1. The medium-term trend in this contract is down and a weekly close above 45 is needed to reverse this view.

EUR-INR futures

EUR-INR futures attempted to stabilise itself over the last five trading sessions. The contract can attempt to move to 63.8 in the days ahead. Reversal from here will pull the contract lower to 62.1 or 61.7. On the other hand, targets on move above 63.8 are 64.4 and 64.9.

GBP-INR futures

GBP-INR futures reversed higher over the past week. Traders can hold their long positions with stop at 70.85. The contract can attempt to move higher to 72.3, 72.8 or 73.2 in the days ahead. Fresh longs should however be avoided if the contract fails to move beyond 72.3.

JPY-INR futures

JPY-INR futures moved sideways in a narrow range between 56 and 56.5 in line with our expectation. We stay with the view that fresh long positions are advised only on close above 56.5. Subsequent target is 57.2.

Published on July 20, 2011

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