Sentiments turnedbearish in the currency market even as equity market closed in indicating that G7 Meeting was the major driver of
the currency pair. The pair which opened the day at 47.86 levels fell to close near the lows at Rs.47.62/USD, despite the fact that Nifty fell
by 80 points and closed at 5003 levels.
Internationally the dollar index fell to 76.50 levels after G7 finance ministers omitted any mention of the currency’s weakness in their final
communiqué. The group also urged China to strengthen the yuan, but gave no sign of how it might overcome Chinese resistance to that
suggestion or resolve other tensions over global currency rates. The weakening of the dollar proved good for the American indices with Dow
Rising by 112 points or 1.18% to close at 9599 points.
In the domestic markets, statement by RBI Governor that India may need to exit from accommodative monetary policy earlier than
advanced economies indicates that government might be interested in increasing interest rates earlier than expected. This lead to bond
yields rising with yield on 10 year benchmark bond quoting at 7.19% from 7.05% during the previous week.
Overall we fell 47.40 as critical support for the USDINR and a close below that will lead to a trend change in the currency pair.
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