USDINR October 8 - 12 Outlook

Release Time:2018-10-08 02:07

Indian rupee ended at a record low, as policy status quo led to dollar strengthening. The currency ended at 73.77 to dollar, versus 73.58 previous closes. Higher crude oil prices and the rupee's depreciation had heightened fears that inflation will rise in the months ahead. The rupee has fallen 15.50% against the dollar so far in 2018 and is Asia's worst performing currency this year. The MPC tightened its stance as it sees inflation rising amid a weakening rupee and global financial market volatility. The repo rate was held at 6.50% following two 25 basis-point hikes in June and August. The stance was changed to ‘calibrated tightening' from neutral and the inflation forecast was revised lower to 3.9%-4.5% for the second half of this fiscal year from 4.8%, with risks to the upside. India's retail inflation in August slowed to a 10-month low of 3.69%, against 4.17% in July. Retail inflation eased below the central bank's medium-term target of 4% for the first time in 10 months. The law mandates the central bank to keep inflation at 4% with a band of two percentage points on either side. US Nonfarm payrolls rose just 134,000, well below estimates of 185,000 and the worst performance since September 2017 when a labor strike weighed on the numbers. The unemployment rate fell two-tenths of a percentage point to 3.7 percent, the lowest since December 1969 and one-tenth of a percentage point below expectations.

Technical Outlook

USDINR is expected to trade with positive bias with buying recommended at lower levels. It has resistance at 74.40 (134.40) while support is at 73.80 (135.50) followed by 73.60(135.86) mark.