Sorry for the long gap people!!
We did come in a striking distance of 64.00 on the USDINR chart and then saw a sharp retracements on Rajan's speech which allayed fears pertaining to domestic oil companies USD demand and on positive global environment.
USD Index has retraced 38.20% fibbo level (80.56) of the upmove from 79.08 to 81.48.
Interestingly, EUR is appreciating - however, I do not see EURO above 1.3600 and JPY is depreciating and US 5yr swaps (ag 3m Libor) are at 1.39% crucial support. It'll be interesting to see where we head first - take out 1.3600 on the EURO or strong close on JPY above 100.25 and higher swaps. Broad USD strength wil give us a sense of future direction.
Power Grid share sale likely to open on Dec 3 (78.70 cr shares on offer - fresh issue of 60.01 cr shares and divestment of 4% stake i.e. 18.69 cr shares). At tuesday's closing price of Rs. 95 per share it is likely to fetch the govt USD 1.20 bn). We will need to see how much of the interest is evinced by FIIs in the disinvestment. This news may see sharp USD selling at open. It also means INR liquidity could tighten further.
We have seen strong paying interest in forwards and MIFOR. With liquidity deficity of 150K crs (as on 18th nov) , the call rate is likely to operate at higher end of the LAF corridor - 8.75%. With 1-6 months on the forwards trading at approx 1.55 ps per day cost, we are likely to see paying in the far end of the curve. Plus paying pressure in MIFOR is likely to see some paying interest translate in forwards. So i would still like to pay forwards (6X12 spread would be possibly better). The risk to this will be sharp rupee appreciation which may see panic covering by exporters.
I am expecting rupee to consolidate in a 61.60 - 63.80 range.
We did come in a striking distance of 64.00 on the USDINR chart and then saw a sharp retracements on Rajan's speech which allayed fears pertaining to domestic oil companies USD demand and on positive global environment.
USD Index has retraced 38.20% fibbo level (80.56) of the upmove from 79.08 to 81.48.
Interestingly, EUR is appreciating - however, I do not see EURO above 1.3600 and JPY is depreciating and US 5yr swaps (ag 3m Libor) are at 1.39% crucial support. It'll be interesting to see where we head first - take out 1.3600 on the EURO or strong close on JPY above 100.25 and higher swaps. Broad USD strength wil give us a sense of future direction.
Power Grid share sale likely to open on Dec 3 (78.70 cr shares on offer - fresh issue of 60.01 cr shares and divestment of 4% stake i.e. 18.69 cr shares). At tuesday's closing price of Rs. 95 per share it is likely to fetch the govt USD 1.20 bn). We will need to see how much of the interest is evinced by FIIs in the disinvestment. This news may see sharp USD selling at open. It also means INR liquidity could tighten further.
We have seen strong paying interest in forwards and MIFOR. With liquidity deficity of 150K crs (as on 18th nov) , the call rate is likely to operate at higher end of the LAF corridor - 8.75%. With 1-6 months on the forwards trading at approx 1.55 ps per day cost, we are likely to see paying in the far end of the curve. Plus paying pressure in MIFOR is likely to see some paying interest translate in forwards. So i would still like to pay forwards (6X12 spread would be possibly better). The risk to this will be sharp rupee appreciation which may see panic covering by exporters.
I am expecting rupee to consolidate in a 61.60 - 63.80 range.
We did open lower on the USDINR at 62.25 levels. However, euphoria around Power Grid divestment was muted and USD was constantly bid up. We may see a spike towards 62.85 levels with Euro currently trading at 1.3438 on news of marginal reduction (10 bps) in deposit rates so as to discourage banks from parking cash with the central bank and rather lend to households and corporates. We still have a key risk event - FOMC minutes to see how Asian markets respond at open.
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