USDINR at All-time high with rising volatility

USDINR Futures hits All-time high in NSE Bourses. Rapid Fall in Commodities prices & ongoing coronavirus pandemic tensions and rising demand for the dollar index, fear of growth slowdown put the emerging markets currencies at risk.

It is noteworthy that foreign portfolio investors (FPIs) have pulled out a whopping 51,243 crores from the Indian capital markets this month. With this kind of selling, the dollar crunch had begun to show its effect on the rupee that has been hovering above the 75-mark hitting all-time high.

Momentum Drivers are currently in control and a possible short-covering above 76 levels are likely due around Monday open with trading sentiment maintaining positive with G2 High is active on the profile charts.

Rising volatility on the other side with a sustained vertical uptrend which is worrisome news for unhedged importers.

Rising US Dollar Index

USDINR Options Data

However, IV’s of 27th Expiry contracts shows very mild volatility at this point. Not many clues from USDINR Options data points. However, at this point IVs are point towards +/- 0.70 points fluctuation in USDINR Futures.

Nervousness is looming around currency traders as emerging market currencies are constantly depreciating against the dollar amid corona virus fears.

USDBRL – Brazilian currency depreciated by 13.5% for the month of March 2020

USDRUB – Russian Ruble depreciated by 19.68% for March 2020

USDIDR – Indonesian Rupiah depreciated by 13.34% for March 2020. Indonesian rupiah touched 16,269 against the greenback at one point, a level not seen since the Asian currency crisis in 1998. 

USDMXN – Mexican Peso depreciated by 24.23% for March 2020

Emerging nations are under direct threat of currency crisis which makes imports too costlier form them and thereby reduction in spending resulting in a steeper economic slowdown.