Daily Market Report: Thursday - November 15, 2012

The Indian Rupee opened at 54.98 levels after closing at 54.88 on Monday. The Intraday range for the rupee is expected between 54.70-55.13 levels.

The Indian rupee fell to its lowest in two months on Monday after data showing a record trade deficit and contraction in factory output stoked fears about economic growth. The Industrial production unexpectedly shrank an annual 0.4% in September, compared with a forecast of a rise of 2.8% while the trade deficit widened to $20.9 billion

The central bank left interest rates on hold last month but cut the cash reserve ratio for banks, confronting the pressure from the government to lower rates. The Reserve Bank of India may ease monetary policy as early as January, Governor Duvvuri Subbarao said, as price pressures ease in Asia's third-largest economy in the first part of next year on the back of slower growth.

The Asian markets dropped amid concern the U.S. budget standoff will curb economic growth. The Currency markets were little changed, with the Euro flat around $1.2733, having halted a five-day slide that had taken the single currency to its lowest in more than two months, and the yen steady at 80.23 to the dollar. Dollar Index is also seen stable at 81. 07 levels.
The risk aversion still continues to persist in the global market driving lower the riskier assets and boosting the demand for safe haven. The US 10 year treasury yield is trading at 1.60%.

Outlook: Exporters have sold above 54.60-70 partially , and again sell 54.65 plus levels only for long term partially (8-12 months only). The rupee is still expected to be weak with some dips in between . Uncovered Importers are still recommended to cover on dips . Overall USD/INR pair remains in a bullish trend.

(Source: Corporate Communications Team, India Forex Advisors Pvt. Ltd.)