FOREX REPORT FOR 09 OCTOBER 2014

MARKET HEADLINES

  
Rupee down 5 paise against dollar in early trade
The rupee weakened by five paise to 61.48 against the dollar in early trade today at the Interbank Foreign Exchange due to increased demand for the US currency from importers. Forex dealers attributed the rupee's fall to increased demand for the US currency from importers and a lower opening in the domestic equity market.Besides, the dollar's strength against other units overseas put pressure on the rupee, they said. The rupee yesterday appreciated by 18 paise to close at 61.43 against the Greenback on sustained selling of the US currency by banks and exporters. Meanwhile, the benchmark BSE Sensex fell by 84.16 points, or 0.32 per cent, to 26,187.81 in early trade today.
 
Will rupee see free fall as US dollar strengthens?
The Indian rupee, along with other global currencies, is depreciating due to steadily firming US dollar on the back of improvement in the US economy. The Indian unit, which appreciated at 58.30 in the month of May due to strong dollar inflows, is on a decline. It weakened by five paise to 61.48 against the dollar in trade today. With expectation of interest rate hike in the US, the USD/INR is anticipated to remain in the bullish trend. According to analysts at Standard Chartered, movement in the US Dollar index is far sharper than the rupee movement and is leading to its weakness. Build-up of long dollar and short rupee positions are seen. Hence some more downside is expected in the near to medium term. Most forex analysts are of the view that INR has a strong support near the 63 level. The USD/INR pair is seen respecting a downside trendline from the past two years, diligently making it to be a very strong support line for the pair. "The pair breached its upside trendline recently at 61 levels (September 2014). This marks a breakout (black colour circle in the chart) in triangular pattern; indicating a further upside for the pair," said Abhishek Goenka (Founder & CEO, India Forex Advisors. "Going ahead, the upside trendline will now become the support line for the pair. Looking at the overbought condition in the stochastics, we might foresee some gains in the Indian rupee. In the coming 6 months, the Indian rupee is expected to target 63 plus levels," Goenka added. "The cluster of bearish candles that formed between 62.00 and 63.00 during October 2013 and February 2014 is now acting as a supply line," said Anindya Banerjee, Currency Derivatives Research Desk, Kotak Securities. According to him, dips are expected to be well supported by the annual price average ribbon, which are located between 59.80 and 60.60 and they are right now rising at the rate of 20/25 paise every month.

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