Buy USDINR; target of 72.00 - 72.10: ICICI Direct

ICICI Direct expects USDINR to find supports at lower levels. Utilise downsides in the pair to initiate long positions.


The rupee sustained sharp losses on Monday in the backdrop of rising worries over fiscal slippage as well as strength in the US$. It is expected to open slightly higher today while the upcoming RBI monetary policy meeting will provide further cues • The dollar was slightly higher on Monday as mounting concerns on Brexit have weighed on the Euro and GBP. Solid January employment data and factory data are supporting US$. Inherent weakness in Euro rather than strength in dollar is supporting dollar index.

Benchmark yield

Sovereign treasury yields rose to 7. 41 % on Monday on the back of concerns that fiscal deficit for the current financial year may slip to 3. 4 % against 3.3 %. Also, outflows from domestic debt markets are aiding higher yields • US treasury yields extended gains to 2 . 72 % tracking the decent January employment data. However, with increasing dovish comments from Fed, a sharp rise in yields would be capped.

Currency futures on NSE

The dollar - rupee February contract on the NSE was at 71. 99 in the previous session. February contract open interest increased 10. 09 % in the previous session • We expect the US$INR to find supports at lower levels. Utilise downsides in the pair to initiate long positions.

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