Forex tips - The Rupee fell by 21 paise to hit a new two-year low of 67.09 Against the US dollar in early trade on Monday in line with the weakness seen across Asian markets ahead of the two-day Fed policy review, which begins on Tuesday. The domestic currency had closed at a 27-month low of 66.88 to the dollar on Friday.
Our call is supported by multiple factors such as a) a substantial over-valued rupee on REER basis, b) backlog of large inflows into Indian market unmatched by growth performance, c) narrowing return arbitrage for the carry cost, which will rise with higher US Fed rate, d) vulnerability of emerging market currencies to a strengthening dollar index as the Fed rate moves towards normalisation and e) further weakening of the Chinese yuan, which we expect to depreciate to over 7 to a US dollar over the next 12 months .
On Monday, most Asian currencies were trading weak amid a rising dollar globally on hopes that the Fed would bring the curtain down on its ultra-low interest rate regime that has been in place for nearly eight years. Among the Asian currencies, the Indonesia rupiah fell 0.82 per cent. Indonesia has been struggling with its current account deficit (CAD). The Korean won (down 0.72 per cent), Malaysian ringgit (down 0.68 per cent), Thai baht (down 0.30 per cent) and Chinese yuan fell (0.15 per cent). The Japanese yen inched up 0.07 per cent. The dollar index, which tracks the movement of dollar against a basket of six major currencies, stood at 97.78. In a poll conducted by the analysts said the Indian currency, which depreciated 5.7 per cent in calendar 2015, could well breach the 70 level against the greenback in 2016.
Written by Unknown
We are Creative Blogger Theme Wavers which provides user friendly, effective and easy to use themes. Each support has free and providing HD support screen casting.
0 comments:
Post a Comment