Forex Report for Exporters and Importers: 8th October 2018

Insignia Consultants

New Delhi

Monday, October 8, 2018

TIME: 10:25 am IST

DAILY FOREX REPORT FOR EXPORTERS AND IMPORTERS

(inter-bank prices below)

UK pound rose on indications of getting a better Brexit deal. Euro is off the lows but net short positions are on the rise. Unless Japanese yen breaks and trades over 115.50 over the coming weeks, chances of a sharp correction will be high. I will prefer to remain on the sidelines on the yen this week. Fundamentals and interest rate differentials will drive currency markets as key US economic data release are over. December is a bit too far at the moment to start thinking of interest rate hike by the Federal Reserve. Geopolitics can have an impact on US dollar Index. Emerging market currencies like the Rupiah and indian rupee can fall if crude oil moves into a short term bearish phase. I believe that both the rupee and rupiah are headed for a sharp correction.

India

State election dates have been announced. Early media exit polls suggest a complete rout for the BJP and its allies in all states going to the votes next month. Failed demonetization and continued changes in GST are the culprits for voter apathy. Central government policies are heavily biased towards large corporates and disfavors small and tiny scale labor intensive enterprises. Indian voters are not idiots.

Global investors will be on the sidelines for the rest of the quarter. I do not foresee big ticket investment starting to come in India partly due to political issues. Value based on the stock markets can result in sharp increase in foreign portfolio investment in October. Indian stocks are really cheap after last week’s rout. Great time to invest in stocks.

RBI did not succumb to global peer pressure of increasing interest rates last week will result in higher growth. Inflation will rise as government continues to increase minimum support price (MSP) on almost all agricultural products to placate farmer vote bank. The BJP looks like the congress of early 1980’s right now. Volatility will rise in the rupee. Exporters should keep on taking partial forward cover of their near term receivables while importers should use trailing stop losses for near term payables.

US dollar-Indian Rupee (usd/inr CMP 73.8750):

One Support: 73.7125

One Resistance: 74.1050

  • Rupee can fall to 72.8550 this week as long as it trades below 74.1050.
  • Momentum is bullish. There will be another wave of rise only over 74.1050 to 74.4925 and 74.9275

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Disclaimer: Any opinions as to the commentary, market information, and future direction of prices of specific currencies, crypto currency, metals and commodities reflect the views of the individual analyst, In no event shall Insignia Consultants or its employees have any liability for any losses incurred in connection with any decision made, action or inaction taken by any party in reliance upon the information provided in this material; or in any delays, inaccuracies, errors in, or omissions of Information. Nothing in this article is, or should be construed as, investment advice. Prepared by Chintan Karnani

NOTES TO THE ABOVE REPORT

PLEASE NOTE: HOLDS MEANS HOLDS ON DAILY CLOSING BASIS

ALL PRICES ARE IN INDIAN RUPEE UNLESS OTHERWISE SPECIFIED

Indian Standard Time (IST): +5:30 GMT

Current Market Price (CMP)

All foreign exchange prices are for inter-bank rates.

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