"India’s rupee, the world’s worst-performing currency in June, is poised to rebound from a record low as trading patterns suggest the rout in emerging markets prompted by shifting sentiment on U.S. stimulus is overdone.
The currency’s 14-day relative strength index against the dollar this week crossed the 70 threshold that signals it had fallen too far, too fast. Options traders were paying the highest premium in more than a year to sell the rupee on July 8, 25-delta risk reversal rates show. The measure had what’s known as a Z-score of 1.6 percent, meaning the premium was almost two units of standard deviation from the 20-day average."
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