8 Apr 2014
Asia EM Express: India elections kick off in north-east regions
On Monday the world's biggest elections, with over half a billion people expected to vote, have begun in India and will last until May 12. The frontrunner for the prime minister's seat is Narendra Modi, leader of the Hindu nationalist Bharatiya Janata party, which is expected to win majority over the ruling Nehru-Gandhi family's Congress party.
Even though Narendra Modi has been accused of spurring anti-Muslim violence in Gujarat in 2002, and religious minorities are worried that he might pursue a Hindu nationalist agenda when elected to office, he is expected to defeat his main opponent Rahul Gandhi. The Congress party has lost a great deal of support due to its involvement in corruption scandals and accusations of not doing enough to boost growth in the country, which has been experiencing worst growth slowdown in a decade.
Charismatic Modi, under whose rule as chief minister Gujarat saw growth averaging 10% in the last ten years, is expected to do the same for the entire country: introduce business-friendly policies, reduce red tape, tackle corruption. The prospect of his victory has already resulted in a rise in India's stock markets and attracted foreign investment.
Economic data
Ministry of Finance Taiwan released March trade balance numbers on Monday, which showed a surplus of USD 1.95B, up from USD 1.57B seen in February. Market consensus pointed to a widening to 3.41B.
On an annual basis Taiwanese Exports rose 2%, down from 7.9% and above expectations of a 0.5% increase. Imports grew 7.5%, following a 4.9% rise and against forecasts of a 0.75% drop.
“Exports and imports continued to bounce around the flat trendlines that have prevailed since 2011,” points out Tim Condon, Head of Research-Asia at IN. “ We’ve got March trade data from Korea and Taiwan and our takeaway is that global economic activity weakened in the first two months of the year and firmed in March.”
Singaporean March Foreign Reserves, published by the Monetary Authority of Singapore on Monday, dropped to USD 273.00B from USD 247.00B in February.
Malaysian FX Reserves grew to USD 130.20B from USD 129.60B.
Technicals
On Monday USD/INR fell by 0.07% to 60.1450. The daily FXStreet Trend Index was slightly bearish, and the OB/OS Index neutral. RSI was neutral at 36 at the last close and has risen to 45 so far today. Daily 2-StDev Volatility Bandwidth was shrinking at 5043 pips, with ATR (14) shrinking at 4247 pips. The 1D 200 SMA was at 61.9154, while the 1D 20 EMA was at 60.5433.
According to Khoon Goh, Senior FX Strategist at ANZ: “Our analysis shows that the rupee tends to underperform during the voting period. Hence, we expect the rupee to give back some of its recent gains in the coming weeks, especially as much positive news has already been priced into the currency.”
“We recommend a tactical trade to buy 1m USD/INR NDF at 60.62 (spot reference 60.16), targeting 62.0 in spot with stop-loss at 59.3.”
Even though Narendra Modi has been accused of spurring anti-Muslim violence in Gujarat in 2002, and religious minorities are worried that he might pursue a Hindu nationalist agenda when elected to office, he is expected to defeat his main opponent Rahul Gandhi. The Congress party has lost a great deal of support due to its involvement in corruption scandals and accusations of not doing enough to boost growth in the country, which has been experiencing worst growth slowdown in a decade.
Charismatic Modi, under whose rule as chief minister Gujarat saw growth averaging 10% in the last ten years, is expected to do the same for the entire country: introduce business-friendly policies, reduce red tape, tackle corruption. The prospect of his victory has already resulted in a rise in India's stock markets and attracted foreign investment.
Economic data
Ministry of Finance Taiwan released March trade balance numbers on Monday, which showed a surplus of USD 1.95B, up from USD 1.57B seen in February. Market consensus pointed to a widening to 3.41B.
On an annual basis Taiwanese Exports rose 2%, down from 7.9% and above expectations of a 0.5% increase. Imports grew 7.5%, following a 4.9% rise and against forecasts of a 0.75% drop.
“Exports and imports continued to bounce around the flat trendlines that have prevailed since 2011,” points out Tim Condon, Head of Research-Asia at IN. “ We’ve got March trade data from Korea and Taiwan and our takeaway is that global economic activity weakened in the first two months of the year and firmed in March.”
Singaporean March Foreign Reserves, published by the Monetary Authority of Singapore on Monday, dropped to USD 273.00B from USD 247.00B in February.
Malaysian FX Reserves grew to USD 130.20B from USD 129.60B.
Technicals
On Monday USD/INR fell by 0.07% to 60.1450. The daily FXStreet Trend Index was slightly bearish, and the OB/OS Index neutral. RSI was neutral at 36 at the last close and has risen to 45 so far today. Daily 2-StDev Volatility Bandwidth was shrinking at 5043 pips, with ATR (14) shrinking at 4247 pips. The 1D 200 SMA was at 61.9154, while the 1D 20 EMA was at 60.5433.
According to Khoon Goh, Senior FX Strategist at ANZ: “Our analysis shows that the rupee tends to underperform during the voting period. Hence, we expect the rupee to give back some of its recent gains in the coming weeks, especially as much positive news has already been priced into the currency.”
“We recommend a tactical trade to buy 1m USD/INR NDF at 60.62 (spot reference 60.16), targeting 62.0 in spot with stop-loss at 59.3.”