USD/INR Rupee Recovers to Pre-NFP Record of 60.40

The Indian rupee fell to a record low of 61.21 to a dollar on Monday during the Asian session. The currency recovered during the day as rumours of a Reserve Bank of India USD selling intervention spread. The INR recovered to 60.30 levels during the North American trading session as news of a potential sit down between the Central Bank and large Oil refiners hit the wires. The objective of meeting with refiners is to come up with a solution to reduce “speculative” positions of INR by partnering with companies that have to buy dollars to pay for supplies denominated in USD.

USD/INR Daily Forex Graph for July 8, 2013

The USD was the strongest currency last week. Gaining against all major pairs across the board. The higher than expected Non farm payroll report on Friday boosted the USD. The final print was 195,000 beating expectations by about 30,000. The healthy employment figured revived fears of an end of quantitative easing first started by Fed Chairman Ben Bernanke two weeks ago when the INR first hit a new all time low.

USD/INR Weekly Forex Graph forJuly 8, 2013

Emerging markets started on a back foot this Monday but as the day wore on the USD gave some of the gains of the last week. There is a lot of speculation of what the FOMC meetings the Fed held on June 18/19 meeting that will be disclosed this coming Thursday. After Bernanke’s original comments came out there was a slew of Fed members that tried to “clarify” and criticize the increase in volatility that resulted from the statement. The upcoming minutes could have the power to disrupt the market again if they disclose contracting information inside the US Federal Reserve.

USD/INR Monthly Forex Graph for July 8, 2013

The USD/INR will be subject for further volatility this week. Political unrest in Portugal and Egypt have not impacted the market that much this week, but they have the potential to trigger a risk adverse movement. A positive NFP has put the end of QE well in sight. Further details from the FOMC minutes could strengthen the USD this week to the detriment of emerging markets. The RBI does not have the power to curb the Rupee’s fall, but they are exploring the most cost-effective but closed-market alternatives. The Central Bank has asked oversees funds to justify that their purchases are true hedging transactions on their bid to reduce speculation on the currency.

USD/INR Fundamental Data to be released this week:

  • INR M3 Money Supply
  • INR Industrial Output (May)
  • INR Bank Loan Growth

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza