INR advances as global equities rebound; Euro stays near 9-year low :: Edelweiss

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Currency Outlook

• Rupee witnessed handsome gains, rising by 1% in the last two sessions and closed below the $63 mark. Broader gains in domestic and global equities, coupled with FOMC minutes showing some caution in the Federal Reserve stance for raising interest rates also weighed on the US dollar against all the Asian currencies, including the rupee
• The Dollar Index rose for the seventh consecutive session on Friday, boosted by recovery in crude oil prices, a strong performance by Wall Street overnight and expectation of QE by the European Central Bank (ECB). US dollar rally was halted in Thursday’s session after Federal Reserve of Minneapolis President Narayana Kocherlakota said that hiking interest rates this year would hinder a recovery in inflation
• Euro wallowed near a nine-year low on Friday on growing expectations that the ECB will embark on full-fledged QE. Britain’s pound reached its lowest level in 18 months against the dollar amid speculation that Bank of England policy makers will keep interest rates at a record low throughout 2015

Currency View

• Indian rupee will open with a strong positive bias against US Dollar. Strong gains in global equities overnight coupled with early morning gains in Asian peers will keep momentum in rupee’s favor.
• The most active January futures are expected to move between 62.20 and 63.00