Indian rupee got off to a weak start against the US Dollar, with 62.42/44 being dealt at the open itself. However, selling from a couple of foreign banks on account of inflows related to Spectrum Auctions, corporate deals and FIIs, pushed the pair back towards 62.22/24 by mid-day. There was sizeable receiving interest in the forwards, as as a result, premiums eased between 6-12 months tenor.
Rupee did not react to the weakness in the majors against the US Dollar and also weakness in the domestic stock market. It has been seen that closer to elections, Rupee tend to appreciate as speculative tide in the offshore market turns positive.
Economic data from China and Euro zone was weaker than street expectation. The manufacturing sector across Euro zone pointed to weakness and so did the Chinese manufacturers. However, the down beat economic numbers and also a relatively hawkish US Fed, the night before, failed to push the Rupee much lower.
Over the near term, we expect a range of 61.80/62.00 to 62.50/60 on spot. Over the last couple of weeks, 62.60 has become a strong barrier for USD bulls to cross, incase they manage to over come that resistance, we can see the up trend extend towards 62.90/63.10 levels on spot.
Analyst, Kotal Securities