Quiet, Happy and Relaxed
Currency market globally has been in turmoil but INR has been in a quiet, stable, happy place thanks to extremely strong macroeconomic factors.
As you can see in the chart above - INR has traded in a tight range between 66 and 69 since last 1.5 years. This at a time when dollar index has steadily moved up. Here's dollar index chart
What's the Big Picture -
Currency is the stock of the nation. India's macroeconomic fundamentals are very strong and hence INR is only reflecting that trend. With US ready to hike rates this year and dollar expected to gain strength - the big question - How long INR can remain in this tight range with strength bias.
Any move below 66 or depreciation above 69 will result in some sharp short-term move. The big question: Will RBI allow INR to appreciate above 66 considering inflation is low and any strength in INR will seriously impact India's competitiveness and derail Make in India program.
It appears RBI will be happy to see INR in this range of 66 and 69 for some more time to come.
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— Deepak Singh (@smarket) March 10, 2017
Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers