May 26, 2015

Indian Currency Market A Weekly Perspective

RETAIL RESEARCH

USD/INR

ST Trend of US$

63.435

Up

Target

Reversal

Prev. Close

Supports

Resistances

64.50

63.37

63.381

63.31-63.00

63.67-63.84

15/05

22/05

% chg

63.381
72.605
99.676
1.878
1.144
119.250

63.435
69.886
98.250
1.913
1.100
121.500

0.09
-3.74
-1.43
1.86
-3.85
1.89

27324.00 27957.50
8262.35
8458.95

2.32
2.38

Currencies
Dollar (USD-INR)
Euro (EUR-INR)
Pound (GBP-INR)
Yen (INR JPY)
EUR-USD
USD JPY

Equities
Sensex
Nifty

Debt
3 mth T - Bill (%)
GS 8.4 2024

7.98
7.95

7.89
7.86

-1.13
-1.13

Source: Bloomberg & SEBI

The week gone by

The Indian Rupee lost last week. W-o-W, the USDINR pair gained 0.09%.

Foreign Markets
The U.S. dollar turned higher on Friday, spurred off its early losses by a U.S. inflation report that indicated
underlying pressures are building and thereby bolstering the case for the U.S. Federal Reserve to raise interest rates
later this year.
The euro's gains were cut and the buying momentum for the dollar increased as the morning New York session
incorporated the U.S. Consumer Price Index data.
While the CPI gained 0.1 percent in April, down from the prior month, the so-called core CPI, which strips out food
and energy costs, increased 0.3 percent, the largest rise since January 2013, after advancing 0.2 percent in March.
The euro fell 0.94 percent to a session low of $1.10055. It was the weakest point since April 29 and put the euro
on track for its worst weekly performance since August 2010.

RETAIL RESEARCH

The dollar climbed 0.40 percent to 121.5 yen, just off a fresh 10-week high of 121.57 yen. Earlier trading left the
dollar flat against the yen after a Bank of Japan meeting presented a slightly more upbeat view of the economy that
gave no sign it was ready to do yet more to support growth.

Outlook
Stronger inflation, along with stronger growth data, is something that the Fed certainly wants to see. Rate hike
expectations have likely been brought forward as a result of some of the stronger data. The Fed is in waiting mode;
we think they will raise rates in September, but they are unlikely to make that decision in the next month or two.
Coming to the Indian Rupee, foreign flows will remain a key factor in the near-term for markets. Technically, the
USDINR pair remains in uptrend and could target the 64.50 levels in the coming week.

Upcoming Major Macro Events

Date

Country

Event

Bloomberg
Estimate

Previous Level

28-May-2015

USA

Jobless Claims

270k

274k

29-May-2015

USA

Real GDP - Q/Q change

-0.8%

0.2%

29-May-2015

India

Gross Domestic Product (YoY Chg)

7.45%

01-June-2015

India

IIP Core (YoY Chg)

-0.1%

02-June-2015

India

RBI Second Bi-monthly Monetary Policy Stmt

Top Traded USDINR Currency Options for the previous trading session (22-05-2015)
Option

No of Contracts traded

USDINR Put 63.50 Strike Price

1,63,682

USDINR Call 64.00 Strike Price

1,53,911

RBI Reference Rate:

Lst Close (22-05)

Daily % Chg
Weekly % Chg
Monthly % Chg

RETAIL RESEARCH

USD/INR

GBP/INR

EUR/INR

Yen/INR

63.573

99.669

70.928

52.660

-0.20

0.76

0.37

0.13

-0.01

-0.62

-2.00

-1.02

1.20

6.20

4.94

0.21

The EUR/INR pair (Daily chart) Technical View

The week gone by saw the EURINR pair correcting from a high of 72.74 thereby reversing the recent uptrend that
the pair was in. The reversal was confirmed once the pair moved below the short term trend reversal levels of
71.02.
Technical indicators are giving negative signals. While the pair trades below the 13-day SMA, momentum readings
are in decline mode and not yet oversold, which calls for caution.
Further downside targets for the EURINR pair are at the next supports of 69.11. Any pullback rallies could find
resistance at 71.2.
Analyst: Subash Gangadharan (subash.gangadharan@hdfcsec.com)

HDFC securities Limited, I Think Techno Campus, Building B, Alpha, Office Floor 8, Near Kanjurmarg Station, Opposite Crompton
Greaves, Kanjurmarg (East), Mumbai 400042, Fax: (022) 30753435
Disclaimer: This document has been prepared by HDFC securities Limited and is meant for sole use by the recipient and not for circulation. This document is
not to be reported or copied or made available to others. It should not be considered to be taken as an offer to sell or a solicitation to buy any security. The
information contained herein is from sources believed reliable. We do not represent that it is accurate or complete and it should not be relied upon as such. We
may have from time to time positions or options on, and buy and sell securities referred to herein. We may from time to time solicit from, or perform investment
banking, or other services for, any company mentioned in this document. This report is intended for non- Institutional Clients only
This report has been prepared by the Retail Research team of HDFC Securities Ltd. The views, opinions, estimates, ratings, target price, entry prices and/or
other parameters mentioned in this document may or may not match or may be contrary with those of the other Research teams (Institutional, PCG) of HDFC
Securities Ltd.

RETAIL RESEARCH