USD/INR reached a two-week lows, after the speculation that the Fed will continue with its record high ($85 billion) monthly stimulus program, which is expected to remain unchanged until the policy meeting on 18-th/19-th of March 2014.
The pair reached a session low at 61.710 at 8:40 GMT, which is pairs lowest point since November 6-th. Support was likely to be found at November 5-th low at 61.595, while resistance was to be encountered at November 18-th high, 63.115.
“The rupee remains the most attractive Asian currency from an outright carry perspective”, as written in a report by a team of strategists at Westpack Banking Corp Global Strategy, Bloomberg News imparted.
Meanwhile, the governor of the Reserve Bank of India (RBI), Raghuram Rajan, raised the repurchase rate for two consecutive months (September and October) by 0.25 basis points in an attempt to relieve the price pressure. Now the level of the repurchase rate reached 7.75 percent. Meanwhile, in October the RBI revised downwards its expectations about the Indian economic growth in the year through March 2014, to 5 percent from 5.5 percent previously.
What is more, the US dollar remained under pressure, since Willam Dudley, the President of the Federal Reserve Bank of New York (FRBNY), made his comments on Monday: “while growth in 2013 has been disappointing, I believe a good case can be made that the pace of growth will pick up some in 2014 and then somewhat more in 2015,” Dudley said. “As growth picks up, I expect to see more substantial improvement in labor market conditions.” According to Willam Dudley, although there were signs of economic recovery, it was still too early for stimulus cuts. Meanwhile, the dollar index lost ground for a third consecutive day,trading at 80.75 at 13:35 GMT, losing 0.05% on a daily basis. The dollar index tracks the performance of the US dollar against six major counterparts.
The latter facts gave reason to Ashtosh Raina, head of foreign-exchange trading at HDFC Bank Ltd. in Mumbai to say that: “There is general dollar weakness. India is also seeing inflows, but these are being countered by demand for the dollar from oil importers.”, cited by Bloomberg.
As for the other major currencies, the US dollar lost 0.27% against its Japanese counterpart, but gained 0.08% against the euro, after the Zentrum für Europäische Wirtschaftsforschung (ZEW) released mixed data regarding economic sentiment and current situation in Germany and the Euro zone as a whole.