INR declines to Lifetime Low of 56, a key psychological level.

Category: Breaking News | Forex Trading | INR
May 23, 2012 | Comments Off |
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INR Forex trading

INR declines to Lifetime Low of 56, a key psychological level.

US$/INR May Futures have shot up as expected to 56.06, Forecasted to touch 56.35 from 54.28 /US$. The Rupee continues its sharp downfall. INR now, at a new record low of 56 per US dollar. The Indian rupee is seen moving now moving above 56 a dollar, a key psychological level. The fall in Indian Rupee comes despite RBI intervention. Expect some dollar selling from exporters to emerge around 56.35 levels. The breach of 56.35 for the INR is pretty crucial now, & should ideally bounce back a little to 55 levels again, a strong resistance now. But if this support of 56.35 is breached with strong momentum, then the INR will lose further strength & it only appears to come in after a further sharp dip to around 58.60. So, technically this move could extend further.

The BSE Sensex and NSE Nifty extended losses following further fall in rupee. Asian markets too slip further; Nikkei 225 Average tanked over 2% as yesterday Fitch down graded Japan to A+ from AA due to growing risk of high public debt. Hang Seng, Straits Times, Kospi andTaiwanwere down 1.2-1.75% while Shanghai declined 0.76%.

India’s economic growth is likely to rise to more than 7.5% in calendar year 2013 but continued government policy uncertainty could erode the country’s longer-term growth prospects, the Organization for Economic Cooperation and Development (OECD) said on Tuesday. The upbeat OECD forecast stood in stark contrast to the pessimistic view offered on Monday by Morgan Stanley, which cut its growth forecasts for India, citing a high budget deficit and slowing private investment. It said it now expected the economy to grow by 6.8%, instead of 7.5%, in 2013.

India’s economic growth slowed to 6.1% in the three months to December, the weakest annual pace in almost three years. The current account deficit is the highest since 1980. Inflation is the highest among the so-called BRICS group of major developing nations. Costly subsidies have pushed the fiscal deficit to 5.9% from a target of 4.6% of GDP in the fiscal year that ended in March 2012. S&P’s rating agency cut its outlook forIndia’s credit rating to negative from stable in April, reflecting worries about high deficits and political paralysis that has stalled progress on major economic reforms.India has had rapid economic growth after opening up its economy in 1991. But investors fret that the government is now squandering a chance to tap the country’s potential.


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