USD/INR likely to break above 67.54 resistance, head for 68.00 level: ScotiaBank
Source: FxWire Pro - Commentary / 14 May 2018 04:45:40 America/New_York
The USD/INR currency pair is expected to break above the 67.54 resistance and then head for 68 with a support level of 67.0 for now. India’s foreign currency stockpile dropped for a three straight week, declining to USD 418.94 billion in the week ended 4 May from USD 420.37 billion a week earlier, according to the latest report from Scotiabank.
The Karnataka Assembly Elections 2018 were held on Saturday, with the results to be announced on May 15. The INR is expected to witness a knee-jerk reaction should the Bhartiya Janata Party (BJP) win the election by a big margin.
Ahead of the 2019 General Elections due in April or May next year, the impact of a victory or defeat in Karnataka cannot be underestimated. Most exit polls except two have predicted the BJP as the single largest party in a hung house, with JD(s) likely to emerge as the kingmaker.
BJP President Amit Shah on Sunday asserted the party would form the next government in Karnataka. However, the RBI’s hawkish tone and future Fed rate hikes will continue weighing on INR-denominated bonds and the INR amidst rising oil prices, despite additional bond purchases under the RBI’s OMOs.
"We believe the RBI will remain worried about India’s elevated core inflation. Meanwhile, we expect the Fed to continue a gradual path of monetary policy tightening and see the 10Y UST yield resuming its upward trend after recent correction and consolidation," the report added.
In addition, escalating geopolitical risks in the Middle East and Venezuela’s oil meltdown are anticipated to boost oil prices further, which will then intensify market concern over India’s continued current account deficit.
Meanwhile, FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest© FxWire Pro 2019. All rights reserved. The FxWire Pro content received through this service is the intellectual property of FxWire Pro or its third party suppliers. Republication or redistribution of content provided by FxWire Pro is expressly prohibited without the prior written consent of FxWire Pro, except for personal and non-commercial use. Neither FxWire Pro nor its third party suppliers shall be liable for any errors, omissions or delays in content, or for any actions taken in reliance thereon.