Rupee: It is a two way move between 51.50 and 52.75. There is tremendous interest both sides. RBI is seen aggressive to arrest built up rupee weakness in traction with weak EUR/USD and NIFTY. EUR/USD is just above support zone of 1.3425-1.3350 and NIFTY holding above support at 4725-4675. There is build up of momentum for move into this range and prepare for test/break of lower end into next pit stop at 1.3150 and 4450. Rupee bulls are strongly shielded by RBI. Because of that arbitrage in 3M NDF has widened to 35 paise; thus RBI dollar sales may not be very effective. However, fear of RBI's intervention has helped in two counts (a) there has been good profit booking on long unwinding and (b) dilution in shorts squeeze in anticipation of RBI's triggered move into 51.50-51.00 or below. The demand side is now from NDF bids; weak EUR/USD into 1.3425-1.3350 and weak NIFTY into 4725-4675.
Moses Harding
Moses Harding
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