Target of 60.00 was met. 60.00 is a very crucial level and a sustained and decisive break below 60.00 is needed for rupee to target 57.00.
After making a low of 59.59, USDINR was constantly bid up today. We touched 9% on the 10Y benchmark yield and equity benchmarks closed marginally down. 9% yield on 10Y G-Sec does not bode well for the overall economy.
With downside risks to CPI inflation, the return on deposits by banks will have to be increased to incentive depositors to put the savings in banks. The growth in aggregate deposits at 11.5 per cent in September 2013 lagged behind the credit growth of 15.10%. With liquidity being tight, deposit growth will have to play catch up for smoother credit off take. Plus if the cost of deposit rises then so does the cost of credit. Higher rates on credit coupled with sticky inflation, will only delay the revival in investment cycle.
Announcement of OMOs will support the yields. However, any action is yet to come from RBI.
In a scenario of rising yields, further delay in investment cycle and still time for the announcement of a clear political mandate , one may see profit taking. Shorts should be exited and fresh longs can be initiated. On the daily charts, a pivot low is in place and RSI divergence. One can go long here for an immediate target of 60.80 with stops below 59.50.
All the best on your trade!!
After making a low of 59.59, USDINR was constantly bid up today. We touched 9% on the 10Y benchmark yield and equity benchmarks closed marginally down. 9% yield on 10Y G-Sec does not bode well for the overall economy.
With downside risks to CPI inflation, the return on deposits by banks will have to be increased to incentive depositors to put the savings in banks. The growth in aggregate deposits at 11.5 per cent in September 2013 lagged behind the credit growth of 15.10%. With liquidity being tight, deposit growth will have to play catch up for smoother credit off take. Plus if the cost of deposit rises then so does the cost of credit. Higher rates on credit coupled with sticky inflation, will only delay the revival in investment cycle.
Announcement of OMOs will support the yields. However, any action is yet to come from RBI.
In a scenario of rising yields, further delay in investment cycle and still time for the announcement of a clear political mandate , one may see profit taking. Shorts should be exited and fresh longs can be initiated. On the daily charts, a pivot low is in place and RSI divergence. One can go long here for an immediate target of 60.80 with stops below 59.50.
All the best on your trade!!
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