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Epic Research
Weekly Price Performance
US Dollar Index (DX) swung between gains and losses and ended 0.2 percent higher week on week. The Indian Rupee depreciated 1.2 percent week on week.
Factors that influenced movement in the DX
Worries amongst market participants over the US fiscal cliff as the negotiations stalled between the US lawmakers after House Speaker John Boehner scrapped a plan to allow higher taxes on earners of annual income of $1 million caused the index to appreciate. However, in the beginning of the session favorable economic growth of US resulted in weakness in the index. Further, there were hopes that the US law makers might solve the fiscal deficit of the nation.
Factors that influenced movement in the Rupee
Depreciation in the rupee was on account of dollar demand from the oil and gold importers. Weak global market sentiments along with strength in the DX However, continued FII inflows into the nation capped depreciation in the currency. Additionally, expectations that the Government of India might announce more reforms to boost the economy also restricted depreciation in the currency.
FII Inflows
For the current month FII inflows totaled at Rs. 18,380 crores till 21th December 2012. While year to date basis, net capital inflows stood at Rs. 1,21,652.10 crores till December 21st 2012.
Outlook
We expect rupee to depreciate initially on the back of worries over the fiscal cliff issue in the global markets. Expectations that the foreign institutional investors might liquidate their positions at the end of the year might depreciate the currency.
Weekly Technical Levels
USD/INR MCX December : Support 54.6/54.2 Resistance 55.65/56.1 (CMP:54.99)
US Dollar Index: Support 79.15/78.7 Resistance 79.95/80.35 (CMP: 79.458)
US Dollar Index (DX) swung between gains and losses and ended 0.2 percent higher week on week. The Indian Rupee depreciated 1.2 percent week on week.
Factors that influenced movement in the DX
Worries amongst market participants over the US fiscal cliff as the negotiations stalled between the US lawmakers after House Speaker John Boehner scrapped a plan to allow higher taxes on earners of annual income of $1 million caused the index to appreciate. However, in the beginning of the session favorable economic growth of US resulted in weakness in the index. Further, there were hopes that the US law makers might solve the fiscal deficit of the nation.
Factors that influenced movement in the Rupee
Depreciation in the rupee was on account of dollar demand from the oil and gold importers. Weak global market sentiments along with strength in the DX However, continued FII inflows into the nation capped depreciation in the currency. Additionally, expectations that the Government of India might announce more reforms to boost the economy also restricted depreciation in the currency.
FII Inflows
For the current month FII inflows totaled at Rs. 18,380 crores till 21th December 2012. While year to date basis, net capital inflows stood at Rs. 1,21,652.10 crores till December 21st 2012.
Outlook
We expect rupee to depreciate initially on the back of worries over the fiscal cliff issue in the global markets. Expectations that the foreign institutional investors might liquidate their positions at the end of the year might depreciate the currency.
Weekly Technical Levels
USD/INR MCX December : Support 54.6/54.2 Resistance 55.65/56.1 (CMP:54.99)
US Dollar Index: Support 79.15/78.7 Resistance 79.95/80.35 (CMP: 79.458)