Market Highlights & Commentary:
- Likely to open weaker at 70.05 as against yesterday close of 69.87. Today INR may range in 69.80 to 70.15. Since last two days, USD was showing signs of strength and it was visible in INR weakness. Overnight, USD saw further gains on the back of weaker Europe data and it looks that USD gains may further extend and as a consequence, INR is also under mild pressure.
- We expect RBI intervention to contain INR weakness. Note that the market is positioning to absorb upcoming inflows from rights issue of Airtel.
- The second swap of 5 bn was also a huge success (bids were 3.7 times) and a large part of swap alike was over in three large bids. Even premiums increased. It shows that there is interest from corporate/ investors to hedge long term liabilities. in the next few days, we may see volatility in cash-spot and spot as banks deal with excess USD that they had accumulated for the swap.
- Crude continues to be above 74.
- Overall, it appears that to be a scenario of playing safe and we suggest next few days import covering.
- Export for 12 months could be hedged around 70.10-70.24 levels and very near term imports around 69.80