The trend turned bearish in currency markets as Dollar dipped 47.00 levels despite equity market for most of the
day. USDINR opened the day 15 paisa down from Monday’s close and continued to trade in downward direction with the pair closing at
47.03 levels the lowest level seen since 3rd June 2009.
The most significant factor of this fall was the breach of co‐relation between equities and currency markets. In normal circumstances rise in
equity markets should trigger weakness in dollar however in past two trading sessions equity markets has been trading in red while dollar is
also falling. We fell USDINR is taking its cue from international dollar prices. The dollar index touched a low of 76.10 yesterday after
Australia increased its interest rates leading to anticipation that other central banks might also follow the suit.
Another key factor we fell that might have affected USDINR is the G7 pressure on China to re‐value yuan. Although China has been non
committal on this issue, we feel that any step in this direction will lead to Indian manufacturing products getting competitive edge in the
International markets.
Overall 46.75 is expected to be a crucial support for the currency pair for the day, while only above 47.13 levels will the pair show some
bullishness for the day
