Indian rupee vs US dollar: Break below 61:70 can see 61:50/40 levels

Updated: Jan 24 2014, 03:31am hrs
Indian rupee, rupee todayIndian rupee after touching an intra day low of 62:02, got a lift from the bids from state run banks. Reuters
Indian rupee opened weak as most of the regional currencies were trading down against the US Dollar. Indian rupee after touching an intra day low of 62:02, got a lift from the bids from state run banks. The invisible hand of the sovereign did not allow the US Dollar to build on its previous days gains. Long bond yields hardened as market was spooked by recommendations from the Urjit Patel committee, asking for making CPI as the inflation target. 10 year yields hardened to 8:67/69, where bargain hunting got it back around 8:62/63 by close. Over the last two trading sessions, the offshore traded USD/INR has moved from discount to par with onshore, indicating abatement of speculative support for Rupee. Domestic equity market closed in the green. USD/INR too, after being ranged between 61:75 and 62:00, closed around 61:85/86 levels.

In economic news, Bank of Japan reiterated its commitment towards inflation of 2% through 60-70 billion yen of monetary easing. In UK, unemployment rate dropped to 7.1% in December, from 7.4% previous month. Over the past 12 months, UK economic data has continued to show impressive strength. With an improving UK economy, but moderate inflation, markets is expecting early end to low rates in the economy. Pound has strengthened significantly against most currencies, over the past year. As long as data continues to stay robust, we can expect further gains in GBP over the medium term.

Indian Rupee is expected to trade within a range of 61:70 and 62:20/30. A break below 61:70 can see 61:50/40 levels.

By Anindya Banerjee, currency analyst, Kotak Securities