How to trade INR / USD in Currency Trading?
Feb 27, 2014 USD to INR conversion rate is 62.04 as of today at 01:00 AM Eastern Time.
Fed has already announced that their decision on slowing down the bond purchases. There is no suprise if they start increasing the Fed Funds Rate from 0-0.25 in the next couple of months. Since US stock market is enjoying the powerful rally for the last 4 years, now the correction is overdue as of today. As soon as they start increasing the interest rate, there will be panic buying in the USD. That can end up in having long squeeze.
Besides there is an uncertainty in Indian economy on election as well as real estate bubble, people not interested in holding onto INR. The only thing which is saving INR as of now is RBI decision to increase the interest rate which is currently at 8%. India has not the interest rate above 8.5% from year 2001. In August 2000, Interest rate in India was at 14.5% when indian real estate was undervalued. Now RBI is in critcial situation to move the interest rate above 8.5% which people have not seen for the last 13 years. That can lead to real estate collapse in indian market, which is inevitable.
As of today, it is safe to long on US$ until we hear the announcement from US Fed on increasing its interest rate. It is better to liquidate your USD position into INR when the Interest rate in India moves up above 8.75%. Because such a move by RBI definitely save INR but the long waited real estate bubble in indian market will burst.