Economics - When can we see the top for USD to INR Conversion?
June 05, 2013 USD to INR conversion rate hovering around 56.75. Last year around the same time, June 12, 2012, the conversion rate peaked at 57.16. Again now we are approaching the same level.
Historically we have not the seen the conversion rate staying above 55. So when it reached 57 last year, indian market especially importers are getting panic. BTW, software companies have started making lots of money. To protect the importers, RBI interference might help since they can sell US$ from their reserve to protect indian rupees going free fall. As soon as it touched 57 last time, the conversion rate briefly went below 53.
Now people are in comfort zone as long as the conversion rate stays between 50 - 55. Now is the time to reach next milestone of touching 60.00. As soon as we reach the conversion rate 60.00, then again people would go panic. Likewise the conversion rate would continue to go up by setting higher highs on demand and higher lows while panic. This trend might continue for another 12 - 18 months, that is until Fed is done with stopping the bond buying programme and increasing the lending rate that can push the prime rate.
Once we reach that point, the conversion rate would be around 65.00 and then Indian rupess will start a bull run. Until then indian rupess need to stay in bear market territory.