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Dec
12

Currency Options USDINR: December series

November series for USDINR options expired on 29th November as expected. In last week of November, Rupee made a dash towards 56. I don’t have a large position on either side in this series.

Given stalemate on US fiscal cliff situation, INR remains vulnerable to any global risk off trade in December last week. On the other side, Government of India (GoI) has become proactive on reforms front. If GoI is able to pass increase in FDI limit in insurance & pension, Banking act in last week of winter session of parliament, then Rupee should find support and even rally. Last week, GoI passed Land acquisition bill, Cabinet committee on Investment board (watered down version of National Investment Board) under PM. SP & BSP, who had supported GoI on FDI vote in retail (direct and indirect), are at loggerheads in Parliament on reservation in promotion for SC/ST. Government will find it tough to pass anything in Parliament on account of this logjam. On 18th December, I don’t expect RBI to cut interest rates. There might be 25 bps cut in CRR, but not in repo rate.

Last week of December should be a good time to build some position for January series. I don’t expect Rupee to breach its previous low of 57.37 in December & January.

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