INR forecast: INR opens stronger 72.41 as against yesterday closing of 72.61 and may trade the day mixed between 72.30-72.70.
Overall, we are battling much bigger issues- rising deficit, capital outflows, Building negative perception against INR and political establishment, global protectionism etc. In this backdrop, reserves of USD 400 bn also looks small. In hindsight, it appears that RBI should have let INR weaken when USD flow was there and may be further increased the reserves.
Yesterday U.S central bank Fed hike its key interest rate for the 3rd time this year by 25bps to 2.25%. USD traded stronger against most of its rival currencies while sending U.S 10Y yield above 3.05. Fed chair Jerome, highlighted the growth of U.S market while giving slight hint that if required one more rate hike can be seen in Dec meeting. Overall the tone of Fed remained in line with what market has anticipated, hence no aggressive buying-selling pressure was seen in the market.