Posts Tagged ‘USDINR option

27
Sep
12

Currency options USDINR: October series

September series for USDINR currency options expired yesterday. In my previous post https://writingoptions.wordpress.com/2012/09/02/currency-options-usdinr-september-series/, I had mentioned that I don’t expect Rupee to breach 56 in September series. All my sold OTM call options expired worthless.

But the biggest surprise of last series was UPA2 government awakening from slumber and its action on diesel price rise, FDI in retail and aviation. Frankly, I have been surprised positively  by bold measures announced by Congress led government. But one thing is pretty clear now, for short term (next 3 months), government action has removed tail risk of India’s sovereign credit rating downgrade. Sentiments have become positive and Rupee has moved sharply from 55+ levels to 53.5 in last 2 weeks. Indian Rupee being high beta EM currency has benefited from QE3. As usual some analysts have come out with ridiculous levels on rupee appreciation. Targets around 48-50 are being talked about. Same analysts had given Rupee targets of 60+ on downside when it was 56-57. It’s a clear case of overshooting on both downside and upside.

Today, the government will announce its borrowing plan for H2 (October-March) of this year. It will be an important cue in terms of Rupee pace of appreciation. In case market is disappointed then Rupee will find it tough to cross 53 on upside. On downside also, I think 55-55.50 should hold out in October series. Broad range for Rupee this series should be 52-55 unless some black swan event happens in Euro-zone. I think breach of 51.5-52 level would be difficult in this series. I have sold a lot of OTM calls for October series.




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