Dollar/Rupees

Dollar continued trade in downward direction with pair breaching the crucial in futures close the day at 45.94 levels. The pair opened at 46.22 levels and closed at 45.94 levels falling by almost 30 paisa as domestic market fundamentals seems to take over from  international currency dynamics. Equity markets traded flat to close at 5281 points even as the direction of Nifty remained positive. In bonds market 10 year benchmark yield also traded flat at 7.64% as compared to a high of 7.66% made two days back. Short term liquidity scenario remained comfortable with Reverse Repo amount quoting at Rs.952 billions (Rs.95200 Cr.) However in long term with rising credit growth and falling M3 one can expect liquidity scenario to come under constraint. In International markets dollar traded sideways against major currencies as ISM non manufacturing was lower than expected. Today India's inflation data will be declared which we feel will be the prime driver of currency pair. Primary articles inflation which touched 15.49% previous week is expected to guide any action by RBI on interest rates in coming days. For today 45.80 should act as a good support and 46.30 will act as key resistance of the pair. In case of rise in Inflation USDINR can touch 45.50 in coming 2‐3 weeks.