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INR rebounds from record low 56.38 : Declined to 56.35 as Forecasted

INR rebounds from record low 56.38

INR today bounced up as expected from a decline to 56.38, Forecasted to touch 56.35 from 54.28 /US$ last week. The Reserve Bank of India (RBI) governor did not rule out selling dollars directly to oil importers. The INR also gained as traders saw sporadic intervention from the RBI, while other traders cited dollar selling by custodian banks as well as exporters converting their foreign currency holdings on the last day of the two-week deadline mandated recently by the central bank. The INR closed at 55.65/66 per dollar after hitting a record low of 56.40 hit earlier in the session. The pair had closed at 56.0050 on Wednesday. The INR has shed 12.7% against the US Dollar since its 2012 peak in early February and is the worst performer inAsiaso far this year.

In the currency futures market, the most-traded near-month dollar-rupee contracts on the National Stock Exchange (NSE), the MCXSX and the United Stock Exchange all ended around 55.72 on a total volume of $6.7 billion.

The big ticket dollar bids by public sector units (PSUs) to meet their business requirement, is adding volatility in the dollar-rupee forex market. This creates artificial demand for the greenback. The Indian rupee shows no sign of respite from its free falling, despite repeated measures taken by the Reserve Bank of India (RBI).

As alerted earlier: 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 euro in the meantime, continued to be battered at a 22 month low level against the dollar and remained vulnerable to further declines as the prospect of a Greek exit from the euro zone kept investors at bay. The single common currency fell to about $1.2544 on Wednesday, its lowest level since July 2010. The euro drew little comfort from an informal summit of European Union leaders that shed no new light on how the euro zone nations intend to tackle its debt crisis, including the threat of Greece’s exit from euro. Against a basket of major currencies, the dollar stood at 82.085. That was close to a peak of 82.221 hit on Wednesday, the dollar’s highest level since September 2010. The global currency pair is currently quoting at 1.2574.¬†The Euro regained its footing Thursday, but only after dropping to its lowest level versus the dollar since July 2010 after economic surveys pointed to a deepening downturn across the euro zone.

The euro traded as low as $1.2507 versus the dollar before trimming losses to rebound to the $1.2575 level, little changed from its level in North American trade late Wednesday. The euro managed to trim losses, however, as overall risk sentiment appeared to rebound. Strategists said a bounce back after weeks of heavy selling pressure may be overdue. The euro remains down nearly 5% versus the dollar since the beginning of May. The dollar index, which measures theU.S.unit against a basket of six major currencies, traded at 82.060, down slightly from 82.073 late Wednesday.

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