Indian Rupee gained by almost 13 paise to close around 62.08/09 on spot. Bunched up inflows from the exporters were noted but at the same time, demand for US Dollars from oilers did not allow the pair to drift below 62.00 handle. In the morning, China reported a robust growth in exports and that set the mood during the Asian session for a strong Rupee, a rub off from the upward trend in the Asian currencies, against the US Dollar.
Post market close, two key macro data were issued from India, one, the industrial production data for the month of December and other the retail inflation for the month of January. In December industrial production contracted by 0.6%. India's industrial production shrunk for the third straight month in December, dragged down by weak investment and consumer demand. Manufacturing sector contracted by 1.6%. However, retail inflation dropped 8.79% in Jan from 9.87% in December but core inflation probably remained at unchanged 8.05/10%. We do not think there is any immediate cause of cheer on the interest rate front, as the RBI governor has made it amply clear that retail inflation has to enter a sustained period of low phase before rate reduction can be considered.
Over the near term, we expect importers and corporates to utilise the probable decline towards 61.50/80 region hedge their near term foreign currency commitment. Key technical level for US Dollar bears remains 61.30/35 level, a break of which can expose 60.70/61.00 region. Therefore the likely range for USD/INR is between 61.50/80 and 62.50/80 on spot.
By Anindya Banerjee, Analyst, Kotak Securities