Forex Market
Dollar continued to fall for the 4th consecutive session banking on rise in equity markets and fall of Dollar index. Dollar opened the day gap down at 46.70 paisa and continued to trade in downtrend closing the day at 46.43 paisa, breaching the crucial support of 46.50. Dollar index weakened to 15 month low against major currencies after G20 finance officials pledged to maintain stimulus measures encouraging investors to buy high yielding assets. Dollar index fell from 75.61 to 75.04 yesterday with euro rising the most against the dollar.
The fall of dollar index also lead to buying in equity markets with Nifty closing the day 102 points up at 4898 levels. Yields on 10 year benchmark government bonds remained flat at 7.32%. Low credit growth in the country has lead to banks reducing interest rates on their home loans and other products showing ample liquidity in the system. Interest rates on term deposits have also been slashed by 0.25 ‐ 0.5% across various maturities.
We expect USDINR to continue its fall with 46.30 acting as a crucial support level.
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