USD/ INR and NIFTY

winstonn

Well-Known Member
#1
Dear friends,

i want to share an interesting observation with you all, though it is not new but worth seeing!

This is intermarket relation between USD/INR cross pair Vs Nifty.

Picture is self explainatory!


Now Our markets went again down from 10th june to 23rd june and USD/INR went up from this period.


Also notice that during 18th may USD/INR got massive sell off and Our markets explode like Big bang theory!

What a Superb inverse relation!

I request all members to post their views!
So you all must be thinking, where would USD/INR head now?

With Best Wishes,
Winston
 
Last edited:

ag_fx

Well-Known Member
#2
There is a general co-relaton between USDINR pair and Nifty. While there could be many reasons behind this, i will eluucidate one possible reason.

FII Flows

If one takes a look at the usdinr chart vs nifty for the period jan 2008 to oct 2008, a clear co-relation is there...When our markets were falling, FIIs were selling and pulling out from our markets....These big players sell equities in indian markets(or liquidate positions in whatever form) and generate INR from it. For this money to be usefull to them, it has to be converted to USD and thus they buy USD/INR pair. As a result, a direct co-relation exists....higher the amount they sell, higher amount USD will be bought, thereby pushing the USDINR rate up.
Also, since INR is partially convertible, FIIs from accross the globe can only trade USDINR and this adds fuel to the fire.
During the period mentioned above, USDINR went from 39 levels to 46-47 levels...

Also, if you see the recent pullback bullish rally in Indian markets and co-relate it with the USDINR pair, you will find that USDINR came from 52-53 to 46-47 levels while markets moved from 2800-3000 levels to 4500 levels.
 

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