Indian Rupee: June'13 Outlook & Asian currency weakest in last one year.

A disappointing report of last month and a shocking month for rupee. Report for June Month is on stands now.

Technical Report

USDINR: Rupee trembled to its 11 month low in May and posted its worst month in last 11 months. On weekly time-frame on technical chart Rupee is likely to touch 57.25 and may enter into uncharted territory if it breached 57.3250, its life time low level. USDINR pair is trading above to its 50,100&200 EMA indicates correction can be expected in the dollar against rupee. In near term Rupee likely to find support around 57.01/25. For a rupee to appreciate it need to close above 56.01 and show some corrective gains in two quick sessions, however the momentum still suggests bearishness in the rupee, which can only neglect after the rupee close above 55.50 levels. In short to medium term 54.78 is very crucial level for rupee to enter into any uptrend channel. Rupee could find enough resistance around 55.87/55.63. Crucial data such as CPI on june12 and the RBI decision on interest rate on June 17 will decide further momentum in rupee. For the month of June view is slightly bearish and the rupee may limit the depreciation till 57.01 levels, and strengthen later in the second session of the month. Range for Rupee in the month of June 57.21-55.17. We will review the same in mid June, after an RBI decision on interest rate taken on 17th June.

Asian currencies remain weak in the month of May.

An Illustrative chart shows how badly the month of May was for all major currencies except Yuan.

Asian currencies had their biggest monthly decline in a year as investors pulled money from regional assets after the Federal Reserve said it could taper its stimulus if the US economy shows sustained improvement. The Bloomberg-JPMorgan Asia Dollar Index dropped by the most since May 2012 as US consumer confidence rose to a five-year high. The foreign funds were net sellers of stocks in Indonesia, Taiwan, Thailand and the Philippines this week after a report indicated Chinese manufacturing shrank in May. Global investors pulled $224 million from emerging-market bond funds in the week through May 29, as per data published by EPFR Global.

Asian policy makers made efforts to shore up growth in May, with South Korea and Thailand cut their benchmark interest rates by 25 basis points to 2.5 %. Taiwan's government announced stimulus measures to boost domestic demand to counter a slowdown in exports.

The rupee has declined the most since May 2012 after central bank Governor D.V Subbarao said retail inflation was still high and the nation's balance of payments is under stress. The economy grew 4.8 % in the first quarter; the govt said it last week. The baht slumped for a sixth straight week on concern policy makers will stem inflows. Finance Minister Kittiratt Na-Ranong said May 29 that an amended regulation will allow the central bank to set conditions or collect fees on money coming in or out of the country. 

South Korea's won fell 2.5 % to 1,129.64 per dollar in May, data compiled by Bloomberg show. Malaysia's Ringgit depreciated 1.7 % to 3.0952, Taiwan's dollar declined 1.5 % to NT$30. 06 and Indonesia's rupiah dropped 0.7 % to 9,795. One country has defied this trend, and it is a big one: China.  The yuan has moved steadily if slowly up against the dollar, China's yuan rose for a third month, strengthening 0.5 % in 6.1345 and touching a 19-year high of 6.1210 on May 27.

With Inputs from Bangkok post, complied by Amit Daga.

A disclaimer: Read the Disclaimer in earlier posts. This post is for information purpose only and not advising any individual or organization on taking any trading decision. The blogger may or may not have any personal interest in the above said the report.