15 Oct 2013
Flash: Indian Rupee looks positive near term - JPMorgan
FXstreet.com (Barcelona) - In view of Venkatesh Sivaraman and Daniel Hui, FX Strategists at JP Morgan, the Indian Rupee looks poised to trade constructively near term on domestic developments coupled with mixed global range bound environment.
Key Quotes
"RBI's shift away from the interest rate defense underscores the confidence that policymakers have in the concessional swaps and the oil swap windows as a means to stabilize the currency. The $6bn of swaps inflows in the first month of the program allows RBI to keep the oil demand of $5bn/ month out of the market for now, keeping INR flows in better balance."
"What is more is, if indicative polls are correct in predicting BJP to win the local elections in December, the market will then price in increased odds for BJP to carry the national election next year and form a stable government. This outcome would be an India risk positive."
"To be sure, being long rupee at 62.17 is a tactical trade – spot gains will be limited, and there are risks (length of oil swap shelf life, a return of tapering worries and RBI intervention)."
Key Quotes
"RBI's shift away from the interest rate defense underscores the confidence that policymakers have in the concessional swaps and the oil swap windows as a means to stabilize the currency. The $6bn of swaps inflows in the first month of the program allows RBI to keep the oil demand of $5bn/ month out of the market for now, keeping INR flows in better balance."
"What is more is, if indicative polls are correct in predicting BJP to win the local elections in December, the market will then price in increased odds for BJP to carry the national election next year and form a stable government. This outcome would be an India risk positive."
"To be sure, being long rupee at 62.17 is a tactical trade – spot gains will be limited, and there are risks (length of oil swap shelf life, a return of tapering worries and RBI intervention)."