Rupee gains to remain intact until UK polls

Last week or before, Tax reforms by Finance Minister India added more concern about issues such as the minimum alternate tax (MAT). In addition the land acquisition bill and some of the important reform measures were negative sentiments to the corporates and overseas traders.

But the FM now announces this may not be applicable from effective today, this seems like he wants to take U turn on this tax measure. On the contrary UK elections are adding more fuel to the high volatility to currency market.

Trading bets:

Meanwhile, GBPINR has been able to crack the significant hurdle of 96.40 levels in the early trade sessions of the week and kept surging higher to register the high of 98.5480. This was mainly on the back of weakness in dollar index compare to other peers.

This has been crazy almost 10% gains without any meaningful correction. Even the oscillators are looking extremely overbought. Hence, there is certainly that the currency cross would consolidate in the coming weeks. On the top side 100 plays crucial mark that will remain as psychological resistance whereas on the downside 96.00 - 95.50 levels may take as an immediate support for the pair.

As a result the currency cross has ended up the week's gains of more than 2%. It is now obvious on the given daily chart that in the past few weeks the pair has rallied one side from the lows of 91.14 towards the high of 99.01.

We now don't expect to see any dramatic decline in the rupee further. It is worth noting that when you look at the real exchange rate of the rupee, Real effective rate it is declining quite sharply so the rupee is become more competitive in recent days and weeks.

So, for the traders can go long on next month futures on speculating grounds. Tumbling volatility in UK currency market and Euro zone turmoil is the answer for why next month futures contract