Currency Views for the Week 02 Jan – 06 Jan 2023

USD/INR

The pair moved in a range of 81.55-82.92 during last week. The top at 82.96 remains same for the past 2 weeks there by making this a Tweezer top. There are chances that there could be stronger supply coming in at close to 82.95 and that the fresh flows could make the pair drift towards 82.44 and then to 82.10 support. Only a daily close below this would suggest further correction towards 81.90. Deeper corrections cannot be expected till we see a close below 82.10. Most likely scenario would be a consolidation between 82.20 and 83.20. A close outside this range requires re-assessment of risk/direction and target.

 

A few more observations:

· The pair has a characteristic of moving in a very narrow range and suddenly moves taking everyone by surprise

· We may not see a runaway in DXY. There can be relief rallies.

· Full impact of the correction has not yet been seen in USDINR currency pair. Hence, the spikes in DXY need not necessarily impact this pair

· The raising upward channel indicate the broader range of 80.10-83.10

The increased volatility and wild swings likely to continue

 

With this back drop it would be preferable to hedge the outward remittances on decline towards 82.40 or lower if seen. Current exchange rate of USD/INR is 82.71.

 

EUR/INR

 Current EURINR exchange rate is 88.52. There has been an unusual calm and the pair moved in a narrow range of 87.85-88.65 during the week. Downside risk seems limited till it closes below 87.20. We can expect a spike towards 90 and followed by a consolidation between 87.90-89.90. Any breach on either side on a daily closing basis would require re-assessment of risk. It is prudent to look for key levels to hedge the risk. The run up has been too sharp and we need to expect the consolidation.

From a remittance perspective it would be prudent to book any outward remittances on slide towards 87.90 levels and the inward remittances by selling EUR currency against INR around 89.90 or higher if seen. 

 

GBP/INR

The GBPINR currency pair is showing signs of exhaustion and has moved in a narrow range of 99.30-100.40. This is very unusual for this currency pair. The current exchange rate of GBPINR is 100.06. Second week in a row the weekly closing is seen negative. While the currency pair is expected to remain biddish as long as it is above 99.30. The foreign currency pair may find strong resistance at 101.30. The currency pair is expected to move in a range of 99.30 & 101.30. It may be prudent to liquidate/hedge inward remittances on any upticks towards 101.30 levels by selling GBP currency against INR.

it is desirable to hedge outward remittances on any decline towards 99.40 or lower if seen. Any close outside the range of 99.30-101.30 might drag the pair by at least 100 pips in the direction of breach. There would be a need of re-assessment of risk.

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