USD / INR Outlook 3/12/2014

USD / INR Outlook 3/12/2014

Indian Rupee has been range bound ( 61 – 64 ) Vs US Dollar from Oct2013. We don’t anticipate this range to brake soon. Volatility due to election can extend the downside range upto 59/60 but that would be an opportunity to short the rupee until the factors affecting the currency doesn’t change significantly.

USD INR

USD INR

 

* Inflation remains higher

* Recent currently account deficit has improved but it needs to continue

* In spite of stock market gains and FII inflows, rupee is unable to make gains

Besides in case of unfavourable election outcome,  capital outflows will be quick and significant to weaken rupee and retest the lows made last year.

Preferred way to play this is to buy USDINR call options during the bouts of INR strength.