Economic data was weak as Japan reported a record current account deficit in December of last year and French industrial contracted more than expected in December. French industrial production was weaker than expected at the end of last year with steep falls in oil refining and automotive output dragging the headline number to negative 0.3% in December from November.
Japans current-account deficit widened to a record in December on soaring imports. The 638.6 billion yen ($6.2 billion) shortfall surpassed Novembers gap of 592.8 billion yen. For 2013, current-account balance was at a surplus 3.3 trillion yen, the smallest on record. Net income earned was at a surplus of 16.5 trillion yen for the year, a record. Last year imports rose 15.4 percent versus a 9.0 percent gain in exports.
Over this week, rupee will continue to trade within the range of 62.00/62.10 and 62.60/80 levels on spot. Traders will pay close attention to the India's macro numbers to be released this week, viz., IIP, inflation as well merchandise external trade data. Keep an eye on the risk appetite in financial markets, as a return of risk aversion can expand the range of Indian rupee by 20/40 paise against rupee on the upside.
By Anindya Banerjee, Analyst, Kotak Securities