-- Posted Wednesday, 15 February 2012 | | Disqus
The Indian rupee has appreciated 6.95% against the US dollar this year and looks headed for more gains as long as it trades below 50.60. There is even speculation that the rupee may gain to 44.00 against the US dollar in the next twelve months. We remain cautiously optimistic on the rupee front. The UPA government has to take steps to reduce the current account deficit and the trade deficit. Inflation is lower due to high base effect. Interest rate cuts will prevent the rupee from a sharp slide as we saw in 2011. But if the fundamentals of the Indian economy are weak later than sooner they will catch up and the rupee could start another round of weakness. Only a big rise in foreign portfolio flows into India will result in sharp gains for the rupee else gains will be gradual.
Once summer arrives the prices of fruits, vegetables, milk and other consumables will zoom and inflation will rise. There is even speculation that Indian petrol prices can rise as much as Rs.3.0 per litre in March (once the state elections are over). The common will get jitters on his budget this summer also. There is also talk of further increases in power tariff in some states this summer. The pace of rise of Indian domestic demand will be very slow. The Rupee has gained to 49.2200/2300 today and looks headed for 49.0500 and 48.78 by Friday. Exporters are selling forwards while importers are covering on spot basis which had added to the recent appreciation. Foreign inflows are also there. Meanwhile, overall imports in January 2012 showed much faster growth (20.3 per cent) compared to the 10.1 per cent growth in exports, putting further pressure on the country's current account deficit position.
TECHNICALLY SPEAKING
US DOLLAR – INDIAN RUPEE: The key long term support is at 47.80 and as long as rupee trades over 47.80 it will trade in wider 47.80-50.50 wider range. There will be a technical break down only below 47.80 to 43.4450.
Only a daily close over 50.50 for three consecutive days will result in another round of weakness.
Disclaimer: Any opinions as to the commentary, market information, and future direction of prices of specific currencies, 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. Website www.insigniaconsultants.in
NOTES TO THE ABOVE REPORT
Indian rupee view of inter-bank rates
All prices are in Indian rupees unless otherwise specified.
-- Posted Wednesday, 15 February 2012 | Digg This Article
| Source: GoldSeek.com
