Rupee Has RBI Backstop as $2B of FX Futures Roll Into July
Comment of the Day

June 28 2022

Commentary by Eoin Treacy

Rupee Has RBI Backstop as $2B of FX Futures Roll Into July

This article from Bloomberg may be of interest to subscribers. Here is a section:

The Indian rupee, which fell to a record low of 78.79 on Tuesday, may draw support from the rolling of over of nearly $2 billion in currency futures, positioning in the derivatives segment show, apart from central bank intervention.

The outstanding position in dollar/rupee futures contracts due to expire on June 28, have fallen by nearly $1.4 billion between Monday and Tuesday, while open positions maturing on July 27 have jumped by roughly $2 billion to $5.8 billion during the same period.

India’s monetary authority has been intervening across markets in recent months to defend the local currency with some analysts expecting it to weaken past 81 per dollar by year-end. The RBI has about $590 billion of forex reserves, after it ballooned to a record high of over $640 billion in September last year.

Eoin Treacy's view

The Rupee might be short-term oversold but it is trending lower. This has been a significant breakdown and suggests the surprises will be on the downside even if in the short-term there is scope for a bounce.

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