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March 16, 2015
Indian Rupee decline on strong dollar demand
News and development
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German WPI rose to 0.5 percent in February from -0.4 percent in January
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UK Construction output fell by 2.6 percent in January from 0.6 percent rise in December 2014
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US PPI fell by 0.5 percent in February from -0.8 percent in January
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US Prelim UoM consumer Sentiment declined to 91.2 marks in March from 95.4 levels in February
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India's trade deficit narrowed to $6.8 billion in February
US DOLLAR INDEX (DX)
INR pairs
Pair Name
Pre. close
Net Chg (%)
USD-INR
63.20
0.71%
EUR-INR
66.96
0.40%
GBP-INR
93.71
-0.40%
JPY-INR
52.09
0.45%
Major indices
Indices
Pre. close
Net Chg (%)
17749.31
-0.82%
Nifty
8647.75
-1.46%
Dax
11901.61
0.87%
Nikkei
19254.25
1.39%
Dow Jones
Major currencies
Currency
LTP
EUR-USD
1.0500
GBP-USD
1.4740
USD-JPY
121.3300
Commodities
Commodity
Brent crude USD/bbl
Gold USD/t oz
LME 3-month copper
LTP
54.67
1158.5
5859
US Dollar increased by 0.90 percent on Friday’s trading session. Dollar made new
12 years high against major currencies on expectation of rate hike by US Federal
Reserve. Divergence in global monetary policy led to the rise in demand for dollar.
USD-INR: The Indian rupee depreciated by 0.70 percent on Friday’s trading session on the back of rise in demand for dollars from Importers. Foreign banks were
seen buying dollars on behalf of foreign investors. Further, rise in risk aversion in
the domestic markets added downside pressure on rupee. Additionally, strong
dollar on expectations of interest rate hike by US Federal Reserve acted negative
for rupee. However, sharp decline in Indian rupee was prevented on the back of
likely intervention of RBI in spot market around 62.85-90/ $1. In intraday Indian
Rupee touched a low of 63.0 and closed at 62.96 against Dollar.
Outlook: Indian Rupee is expected to trade with negative bias on the back of rise
in demand for dollar amid strong dollar globally. Dollar made new 12 year high
against major currencies as the strong economic data from US fuelled the expectations of interest rate hike. Investors are looking forward to US Federal Reserve
monetary policy meet on 17-18 March. Investors expect central bank to drop
usage to reference of the word patience in its policy statement. Demand for
dollar from importers may go up amid fears of an early rate hike in US. Indian
Rupee may track weakness in other Asian currencies. However, sharp downside
may be prevented on expectation of strong FII inflows. It is anticipated that
investors may shift focus towards emerging markets after ECB starts with its QE
and Indian markets are expected to attract more funds. India's trade deficit
narrowed to a 17-month low of $6.8 billion in February as oil imports more than
halved from a month earlier. USDINR March expected to trade in a range between 62.70 on lower side to 63.5 on higher side with upward trend.
EUR-INR: Euro depreciated by 1.18 percent on Friday’s trading session on the
back of strong dollar. Further, divergence in global monetary policy and concern
over Greece bailout added downside pressure on Euro. Euro area finance ministers rejected proposed economic reforms put forward by Greece in exchange for
more loans. Foreign investors are shifting funds from European to US bonds. In
intraday Euro touched a low of 1.0461 and closed at 1.05 against Dollar.
Outlook: Euro currency expected to trade with negative bias on the back of
strong dollar. Further, divergence in global monetary policy will add downside
morning view (currency)
pressure. Strong economic data from US fuelled the expectations of interest rate hike. Whereas, ECB President Mario Draghi
confirmed that it will begin purchasing euro zone government bonds on Monday under its new quantitative easing program. ECB
said it will buy euro zone government bonds and other debt at a monthly rate of €60bn until September 2016 or until inflation is
pushed backed towards a target of close to but below 2%. The European Central Bank opened its quantitative easing program by
reportedly making bond purchases into markets. Further, concern over Greece exit from Euro Zone may keep euro under pressure.
Investors are looking forward to US Federal Reserve monetary policy meet on 17-18 March. Investors expect central bank to drop
usage to reference of the word patience in its policy statement. EURINR March expected to trade in a range between 66.0 on lower
side and 67.5 on higher side with downward trend.
GBP-INR: Pound depreciated by 0.95 percent on Friday’s trading session on the back of dovish comment from Bank of England Gov
Mark Carney. BOE Gov Mark Carney said that interest rates in UK may rise at a slower pace than expected. Further, weak manufacturing, industrial production and construction output data continued to add downside pressure. Additionally, divergence in global
monetary policy acted as a negative factor for sterling. UK Construction output fell by 2.6 percent in January from 0.6 percent rise
in December 2014. In intraday Pound touched a low of 1.4695 and closed at 1.4740 against Dollar.
Outlook: Pound is expected to trade with negative bias on the back of strong dollar. Dollar gained strength as the strong economic
data from US fuelled the expectations of interest rate hike. Additionally, BOE governor Carney said that interest rates may rise at
a slower pace than expected if global inflation remains subdued. Further, weak economic data from the country will add downside
pressure. Divergence in global monetary policy may further add downside pressure. GBPINR March expected to trade in a range
between 92.0 on lower side and 93.3 on higher side with downward trend.
JPY-INR: Japanese Yen depreciated by 0.04 percent on Friday’s trading session and remained near its low on the back of strong
dollar coupled with weak economic data from the country. Dollar gained strength as the strong economic data from US fuelled the
expectations of interest rate hike. Further, divergence in the global monetary policy weighed on Yen. Additionally, rise in risk
appetite in the domestic markets led to the decline in demand for safe haven. In intraday Yen touched a low of 121.5730 and closed
at 121.33 against Dollar.
Outlook: Yen is expected to trade with negative bias on the back of strong dollar coupled with rise in risk appetite in the domestic
markets. Further, weak economic data from the country may add downside pressure. Investors will remain cautious ahead of
economic data from US. Investors are looking forward to US Federal Reserve monetary policy meet on 17-18 March. Investors
expect central bank to drop usage to reference of the word patience in its policy statement. JPYINR March expected to trade in
a range between 51.6 on lower side and 52.4 on higher side with upward trend.
Domestic economic data
Data
WPI y-o-y
Country
Date
Time
Expected
India
16/3/2015
12:00pm
-0.8%
Previous
Impact
-0.39%
Medium
Previous
Impact
Global economic data
Data
Country
Date
Time
Empire State Manufacturing Index
US
16/3/2015
6:00pm
8.1
7.8
Medium
Capacity Utilization Rate
US
16/3/2015
6:45pm
79.5%
79.4%
Medium
Industrial Production m/m
US
16/3/2015
6:45pm
0.3%
0.2%
Medium
NAHB Housing Market Index
US
16/3/2015
7:30pm
57
55
Medium
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March 16, 2015
Expected