ICICI Direct expects USDINR to find supports at lower levels. Utilise the downsides in the pair to initiate long positions.
ICICI Direct's currency report on USDINR
Spot Currency
The rupee sustained losses to end at 69.87 yesterday tracking gains in the dollar index as well as higher oil prices. Today would be the settlement of RBI’s $5 billion buy-sell dollar rupee swap. Also, a spike in forwards premium is adding to rupee volatility • The Dollar Index ended on a strong note and ended above 98 levels, highest since June 2017. Strong back to back retail sales and new home sales data have spurred the dollar higher. While European economic data continue to remain subdued. Euro has breached the 1.12 levels. It risks testing 1.09 levels while EM currencies could also come under pressure.
Benchmark yield
Sovereign benchmark treasury yields cooled off to 7.43% on Wednesday amid announcement of OMO as well as lower global yields. Strong oil prices as well as outflows seen in domestic markets in April are weighing on domestic debt • US treasury yields fell 5 bps to end at 2.52%. Yields remain in a range awaiting further economic data. US new home sales for March jumped to 692000 units, which is the highest since December 2017.
Currency futures on NSE
The dollar-rupee May contract on the NSE was at 70.22 in the previous session. May contract open interest increased 23.86% in the previous session • We expect the US$INR to find supports at lower levels. Utilise the downsides in the pair to initiate long positions.
Intra-day strategy
| US$INR May futures contract (NSE) | View: Bullish on US$INR |
| Buy US$ in the range of 70.25-70.31 | Market Lot: US$1000 |
| Target: 70.55 / 70.65 | Stop Loss: 70.12 |
| Support | Resistance |
| S1/ S2: 70.20 / 70.05 | R1/R2:70.50 /70.65 |
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