Sunday, 23 February 2020
3:43 pm IST
Asian currencies weakened sharply on Friday. India was closed was Friday. Rupee broke past 72.0000 against the US dollar on Friday in Newyork. There will be short covering if rupee weakens by more than thirty paisa and also trades over 72.0000 till Wednesday. I am more concerned by corporate debt demand. A lot of knock out options will be triggered if the rupee weakens against the US dollar this week. Only if exporters sell aggressively and/or RBI intervenes that rupee will gain this week. The culprit for rupee and Asian currencies is the global spread of corona virus and nothing else. If crude oil falls sharply the weakness will be short lived.
Importers and payers will need to wait till Monday after noon and then decide on hedging strategy. They should not panic at Monday opening weakness (if any).
Exporters should use any big weakness of sixty paisa and more to sell far forward. (three months and more). Use trailing stop loss for weekly receivables.
Every news is rupee positive BUT for corona virus impact. If the corona virus global spread continues on or after 18th March, the world will see a sustained bout of stagflation. Global stagflation situation (if any) can result in rupee breaking past 75.0000 in April.
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