Today, till about 9:05 AM, it appeared that for sometime global risk may subside as US fed hints at easing and equities were positive. Suddenly, CNY shots up to 7.037 (from about 7.056). It changed the whole analysis. CNY repeated the past pattern of sporadic jumps. Risk aversion is clearly back. In addition to China, we have BREXIT led GP weakness and many uncertainties looming over EU zone.
To us, ut now appears that INR may also see further weakness. Technically, looks moving towards 74 levels over next 4-6 weeks. Even EUR looks moving towards 1.0780 and GBP towards 1.18 and 1.15 (once it breaks below 1.1950)
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As a strategy- We suggest that any dips towards 70.80-71.20 could be use to hedge imports till Oct. For very near term of few days, plain call option could also be used to hedge. While for exports, long term export hedging could be paused and restarted if INR closes below 71.20. In the weaker side, some export hedges could be picked around 72.50, 73 and 73.80+