Derivatives

Rupee losing steam

Gurumurthy K | | Updated on: Jan 15, 2022
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The rupee futures contracts can see some pull-back in the next week when the market reopens

After three weeks of strong rally, the Indian Rupee seems to be losing it momentum. The rupee futures contracts traded on the National Stock Exchange (NSE) began the week on a positive note by extending the rally against the US Dollar (USD), Euro (EUR), British Pound (GBP) and Japanese Yen (JPY).

However, the US dollar weakening against the majors reversed the rupee lower against them in the second half of the week. The USDINR January Futures contract made a low of 73.8775 and bounced-back from there to close at 74.21 on Friday, up -0.34 per cent. The rupee lost the most against the Japanese Yen last week. The JPYINR January Futures contract on the NSE reversed higher sharply from the low of 64.0950 and ended the week 1.21 per cent higher at 65.15. The sharp fall in the USDJPY pair from about 115.85 to 113.50 aided the Yen to strengthen against the rupee in the domestic market.

Similarly, the euro breaking above 1.14 and rising to a high of 1.1480 and the Pound surging past 1.36 to make a high of 1.3750 in the past week pushed these currencies against the rupee also higher. The EURINR and the GBPINR pairs were up 0.9 and 0.96 per cent, respectively, last week. However, the majors have given back some of their gains in the US sessions on Friday following the strong bounce in the dollar index from the low of 94.63 to a high of 95.27.

As such, the rupee futures contracts can see some pull-back in the next week when the market reopens on Monday. However, on the charts there seems to be limited room left for the rupee to strengthen going forward. As such, any dips in the USDINR, EURINR, JPYINR and GBPINR futures contract in the coming days could be short-lived and a further rise is possible.

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Published on January 15, 2022

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