📊 FxMethods Treasury Desk – Weekly Outlook: 1st Dec to 5th Dec'2025!!

USDINR - NZDUSD - NZDJPY

USDINR Previous Weekly Snapshot

Open: 89.1450 High: 89.4950 Low: 89.0450 Close: 89.4600

This reflects a modest but clear up-move over the week — the rupee ended slightly weaker vs the dollar, hovering close to the 89.45–89.50 zone. Macro & Micro Drivers

Macro Factors

• Global forces remain tilted in favor strong U.S. economic data, interest-rate differentials, and continuing global risk-aversion keep the dollar attractive versus emerging-market currencies. This broad “strong-USD” backdrop continues to put pressure on the rupee.

• Federal Fiscal Deficit (Oct): The deficit widened sharply to ₹8,251.44 billion from ₹5,731.23 billion, reflecting higher government spending and lower-than-expected revenue inflows. While this is seasonally common in mid-fiscal year, the pace of slippage may keep bond yields slightly elevated and can influence market expectations on government borrowing.

• FX Reserves: Foreign exchange reserves eased to USD 688.10 billion from USD 692.58 billion. The decline is modest and likely reflects RBI intervention to smooth volatility in USDINR and valuation effects. Reserves remain comfortably high, supporting external-sector stability.

• GDP Growth (Q2 YoY): Economic growth surprised on the upside at 8.2%, compared to 7.8% previously. This upbeat print reinforces India’s strong domestic-demand momentum and positions the economy as a global growth outlier. Higher GDP also offsets some concerns arising from the fiscal deficit widening.

Forecast & Scenario Outlook ( 1^st Dec to 5^Th Dec 2025)

On base of the recent close and current macro setup:

• Base Case (most likely): USD/INR 89.50–89.80 as resistance zone; support around 89.10–89.20.

• Bullish USD / INR-Weakness Scenario: If dollar demand rises (importers, risk-off, oil price spike), pair could test 89.90–90.20.

• Rupee-Support Scenario: If global dollar weakens (e.g. lower U.S. yields, dovish Fed cues), or if there are strong capital inflows or oil falls — pair may dip back to 89.00–89.10.

• Given the current backdrop (strong dollar, oil, importer demand), the bias is mildly towards upside (i.e. rupee weakening / USD/INR rising).

Hedging & Trading Strategy (for Corporate / Treasury / FX Users)

Actionable ideas:

• Hedge existing exposures: If your firm/import desk has USD-payables or expects dollar outflow in next 1–3 months, consider hedging selectively in the 89.50–89.80 zone.

• Short-term tactical call (week): Given volatility, hold a portion of USD payables unhedged — if dollar spikes beyond 90.00, hedge; otherwise, ride potential dip.

• Contingent FX swap/option strategy: For firms with forex exposure and uncertainty, using FX-options (if available) could give asymmetric payoff: downside INR rally capped to cost of option; upside protected.

• Risk-mitigation for importers: Keep dollar-cover ready, but monitor global cues (oil, US rates, geopolitics). Avoid over-hedging in one go if near-term demand not urgent.

NZD/USD & NZD/JPY (Major move in the week)

Macro & Micro Drivers (Summary)

• USD softening: Lower US yields and mild risk-on tone helped the Kiwi gain across the board.

• RBNZ stance supportive: Market expects the RBNZ to remain relatively tighter due to sticky domestic inflation.

• Japan remains dovish: BOJ continues ultra-loose policy → keeps JPY structurally weak.

• Commodity sentiment stable: Steady dairy prices and mild China stabilization support NZD.

• NZD/USD broke above 0.5700, triggering technical buying.

• NZD/JPY followed global cross-JPY strength amid yen weakness and strong risk appetite.

• Positioning was NZD-light → short-covering boosted both pairs.

Directional Forecast (1st Dec to 5th Dec 2025)

NZD/USD

Bias: Mildly bullish to sideways

Expected Range: 0.5680 – 0.5780

A sustained break above 0.5750 could target 0.5800+, but momentum may cool after a +2.16% week.

NZD/JPY

Bias: Bullish

Expected Range: 88.80 – 90.50

Yen weakness persists unless BOJ hints at intervention.

NZD strength + JPY softness → upward pressure continues.

Hedging Strategy (Importers & Exporters)

For NZ Importers (Payables in USD or JPY)

Current NZD strength is ideal for front-foot hedging:

o    NZD/USD: Hedge 30–40% around 0.5730–0.5750

o    NZD/JPY: Hedge 30–40% near 89.40–89.60

Use layered hedging → don’t hedge 100% at once.

For NZ Exporters (Receivables in USD or JPY)

Avoid heavy hedging at current strong NZD levels.

Prefer partial hedging only on dips:

o    Below 0.5680 (NZD/USD)

o    Below 88.80 (NZD/JPY)

Consider collars/seagulls to protect downside without giving up upside.

Key Risks to Watch

·         US CPI, US yields → could swing USD sharply.

·         BOJ commentary or yen intervention chatter → sudden yen appreciation risk.

·         China PMI or commodity demand data → affects NZD sentiment.

·         Global risk mood → equities & VIX will guide NZD/JPY volatility.

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