Rupee depreciates on open, breaches 80-mark amid risk aversion in markets; USDINR pair to trade in this range

The Indian rupee breached psychological barrier of 80 per dollar at open on Tuesday. The local unit opened on a flat note at 79.98 per dollar against previous close of 79.97, but immediately crossed the 80 mark.

Rupee depreciates on open, breaches 80-mark amid risk aversion in markets; USDINR pair to trade in this range
Rupee is expected to remain volatile this week and could hold its key support level of 80.55 on a closing basis

The Indian rupee breached psychological barrier of 80 per dollar at open on Tuesday. The local unit opened on a flat note at 79.98 per dollar against previous close of 79.97, but immediately crossed the 80 mark. Rupee is expected to remain volatile this week and could hold its key support level of 80.55 on a closing basis, said experts. The domestic currency slid to an all-time low level of 80 in intra-day trade before settling down by 15 paise at 79.97 (provisional) against the US currency in the previous session due to a surge in crude oil prices and unrelenting foreign fund outflows. The local unit has declined by about 25 per cent since December 31, 2014, and is nearing 80 against the American currency. The value of the rupee declined from 63.33 per dollar on 31 December 2014, to 79.41 on 11 July 2022.

Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services

“Rupee consolidated in a narrow range in yesterday’s session after retracing from higher level on Friday. The Dollar too fell against its major crosses as investors pared bets on how aggressive the Federal Reserve would be in raising rates at its meeting later this month. The greenback fell after data showed U.S. home builder sentiment plummeted in July to its lowest level since the early months of the coronavirus pandemic.”

“Pound rose ahead of the jobs and inflation number that will be released later this week. Britain’s former finance minister Rishi Sunak held onto his lead in the race to become Britain’s next prime minister on Monday as another hopeful was knocked out, leaving four candidates in an increasingly bitter contest to replace Boris Johnson.  Today, focus will be on the final CPI number from the EU to gauge a view for the currency. We expect the USDINR(Spot) to trade with a positive bias and quote in the range of 79.40 and 80.20.”

Anindya Banerjee, VP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities Ltd

“USDINR spot closed 9 paise higher 79.97, whisker away from all time high near 79.99. On Monday, rupee brushed aside all positive cues by way strong equities and weaker dollar index. Strong demand for oil marketing companies kept the pressure on. Over the near term, bias continues to be upward. We expect the pair to trade within a range of 79.60 and 80.30 on spot.”

Anuj Choudhary – Research Analyst at Sharekhan by BNP Paribas

“On Monday, Indian rupee, opened in the green on on strength in domestic equity markets and a weak US Dollar. However, Rupee weakened in the latter half of the day on surge in crude oil prices and selling pressure by FIIs. FII outflows rose to Rs.1,649 crores on Friday. Dollar declined despite upbeat economic data on expectations that Fed may hike rates by 75 bps instead of 100 bps as expected earlier.”

“US Retail Sales increased by 1% in June from -0.1% in May. Empire State Manufacturing Index rose to 11.1 in July from -1.2 in June. US Consumer Sentiment improved to 51.1 in July as against 50 in June. We expect Rupee to trade with a positive bias of rise in risk appetite in global markets and weakness in US Dollar. Improved global risk sentiments may also support Rupee. However, pullback in crude oil prices and continued selling pressure by FIIs my cap sharp gains in Rupee. USDINR spot price is expected to trade in a range of Rs 79.20 to Rs 80.80 in next couple of sessions.”

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