28 Oct 2013
Flash: Keen on supporting INR strength into year end - Westpac
FXstreet.com (Barcelona) - USD/INR has not been all that encouraging for rupee bulls in recent weeks, notes Jonathan Cavenagh, FX Strategist at Westpac, adding that risk/reward to be short USD/Asia pairs at current levels is not compelling.
Key Quotes
"The more recent inflation has not been encouraging and the market is a looking for a 25 bps hike in the repo rate at this week's RBI meeting (due on Tues). This may well be discouraging flows back into the Indian debt market, which has found limited foreign appetite in recent months, particularly compared to economies like Indonesia."
"The other factor limiting downside in USD/INR is the desire by the RBI to rebuild FX reserve positions. There was a report last week that FX reserves could be boosted to 300bn, which would be a decent increase from the current 281bn level."
"We still like INR strength into year end but suspect better entry levels will present themselves over the next 1-2 weeks. Look to sell rallies in 1 month USD/INR on moves above the 63.00 level."
Key Quotes
"The more recent inflation has not been encouraging and the market is a looking for a 25 bps hike in the repo rate at this week's RBI meeting (due on Tues). This may well be discouraging flows back into the Indian debt market, which has found limited foreign appetite in recent months, particularly compared to economies like Indonesia."
"The other factor limiting downside in USD/INR is the desire by the RBI to rebuild FX reserve positions. There was a report last week that FX reserves could be boosted to 300bn, which would be a decent increase from the current 281bn level."
"We still like INR strength into year end but suspect better entry levels will present themselves over the next 1-2 weeks. Look to sell rallies in 1 month USD/INR on moves above the 63.00 level."