Debt market & USDINR Currency Update : 25.08.2016
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• Government bonds snapped a two-day losing streak on value buying, amid expectations that the liquidity boosting measures of the central bank would continue under the next governor• The benchmark 7.59% bond maturing in 2026 ended at | 103.07 against the previous close of | 102.90
• The benchmark 7.59% 2026 bond yield fell 2 bps to end at 7.14% against the previous close of 7.16%
Forex (US$/INR)
• The rupee fell against the dollar, as upbeat US housing data raised speculation about a Federal Reserve rate increase this year, supporting gains in the US dollar over the rupee
• The dollar index against six major cu rrencies ended slightly higher at 94.79, up 0.26% against the previous close of 94.54 on strength in the US dollar on growing speculation over rate hike signals later this week
US$/INR derivatives strategy:
Sell August Contract • In the currency futures market, the most traded dollar-rupee August contract on the NSE ended at 67.16. The August contract open interest fell 5.45% from the previous day • September contract open interest was up 4.66% from the previous day • We expect the US dollar to meet supply pressure on rallies. Utilise upsides in the dollar to initiate short strategy