USD/INR at over 5 month low on weak global dollar, pair
at 46.85 after hitting 46.82 earlier, lowest level since December 19, vs 47.03 last close. “The opening is an adjustment for the dollar weakness against the euro and other global currencies, the pair may test 46.70 now that 46.90 is broken,” says private-bank dealer; tips 46.70-47.10 band this session. “Further gains will now depend on stock movements, and central bank action. The RBI is unlikely to intervene right now but should cap a sharp gain, it would probably prevent 46.70 being broken,” dealer adds. Notes, “RBI does not seem to be defending levels as much as capping sharp volatility.”

BOJ policy board member Kamezaki says Japan’s economy
likely to recover gradually late this fiscal year, but economy could worsen if overseas economic recovery slows, uncertainty high over economic outlook, must take policy steps proactively based on changes in economic conditions; suggests BOJ remains on guard against downside risks, will take more measures if necessary, but extent will be less drastic than before. Central bank at May meeting upgrades economic assessment for 1st time in nearly 3 years, while keeping policy target at ultra-low 0.1%. JGB players watched to see if Kamezaki would indicate possibility of BOJ boosting JGB purchases, but he just says uncertain if large amount of JGB issuance by government may push yields higher. Kamezaki will meet press for about 30 minutes from 0500 GMT.

USD/INR likely open down on weak global dollar, but may
face possible heavy central bank intervention, pair likely open around 46.90 vs
47.03 last close. “The rupee’s strength is now in the hands of the central
bank. If the central bank continues to defend the 46.90 level, the pair should
stay quiet today, caught between downward pressure from dollar sellers, and
central bank buying,” says foreign-bank dealer; tips 46.85-47.15 band this
session. Foreign funds were net sellers of provisional INR2.33 billion worth of
Indian stocks Tuesday, 1-month NDF quoting at 47.08/47.18.