Rupee may see correction

Rupee fell by a massive 61 paise to 41.14/$. Expectations of strong capital inflows helped the rupee to hang around 9-year highs early last week. However, the meltdown in equity markets world-wide, including the local indices dragged rupee down late in the week. Persistent suspicion of dollar absorption by PSU banks and rise in oil prices put added pressure on the local unit.

Forward premia moved in either direction. Overall, receiving interest prevailed amidst comfortable liquidity and dollar short-covering in spot. Owing to wide swings, NDFs also came into play. Six-month and 12-month premia closed at 2.14% and 2.37%, respectively. Undertone is expected to be cautious with global flows in keen watch of investors. Expectations of strong IPO-related inflows could bring support for the rupee.
Credence Analytics India Pvt Ltd