Rupee likely to appreciate on weak dollar, optimistic equity markets; USDINR pair may trade in this range

The Indian Rupee is likely to appreciate on Friday on the back of weak dollar, declining crude prices, positive domestic and equity markets. USDINR is in the correction zone and could head towards 79.30

Rupee likely to appreciate on weak dollar, optimistic equity markets; USDINR pair may trade in this range
Indian rupee to face initial resistance at the 79.40 mark, and only a move past the same would open the doorway for further appreciation

The Indian Rupee is likely to appreciate on Friday on the back of weak dollar, declining crude prices, positive domestic and equity markets. USDINR is in the correction zone and could head towards 79.30 while on the higher side, crossing 79.95 becomes challenging, according to analysts. Today, focus will be on the preliminary inflation number from the Euro zone and the core PCE index number from the US. In the previous session, rupee appreciated 26 paise to close at 79.65 (provisional) against the US dollar, tracking a firm trend in the domestic equities. The dollar index, which measures the greenback’s strength against a basket of six currencies, was up 0.12 per cent at 106.58.

Dilip Parmar, Research Analyst, HDFC Securities

“The forward markets indicate USDINR could open 15 paise lower from the previous close on the back weaker dollar index and a rebound in risk assets backed by institutional buying. Indian Rupee heads for the seventh monthly decline, earlier in 2018 such a kind of move was seen on the back of US-China trade worries and tighter financial conditions. While this time inflation and slower growth remain the biggest worry for global central banks. On Thursday, spot USDINR fell 15 paise or 0.18% to 79.76, the biggest one-day percentage fall since May 20 amid foreign fund inflows and a sharp surge in domestic equities. Looking at the past few days’ price actions, we believe USDINR is in the correction zone and could head towards 79.30 while on the higher side crossing 79.95 becomes challenging.”

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

“Rupee rose marginally after consolidating in a narrow range for the last few sessions following hawkish Fed policy statement released earlier this week. The U.S. Federal Reserve raised interest rates by 75bps, as was widely anticipated, and comments from Fed Chair Jerome Powell spurred hopes for a slower hiking path. The dollar fell against its major crosses as comments from Fed Chair Jerome Powell after the policy statement were seen as dovish.U.S. second-quarter GDP fell at a 0.9% annualized rate, according to the Commerce Department’s advance estimate. This compares with economist expectations for 0.5% growth and came after a first-quarter contraction of 1.6%. Today, focus will be on the preliminary inflationnumber from the Euro zone and the core PCE index number from the US. We expect the USDINR(Spot) to trade sideways  and quote in the range of 79.40 and 80.05.”

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

“The USDINR spot closed 14 paise lower at 79.75, thanks to the less than hawkish stance of the US Fed. With the US Fed hinting that they are looking to slow the pace of rate hikes in the upcoming meetings, USD saw profit taking. Risk on mood in equity markets also helped the Rupee. Over the near term, we expect USDINR to trade with a negative bias within a range of 79.40 and 80.00 on spot.”

Sugandha Sachdeva, Vice President – Commodity and Currency Research, Religare Broking

“The Indian rupee has managed to clinch gains of around 0.30% as the slide in the US dollar on the back of less hawkish US Fed rhetoric has boosted “risk on” sentiments in the markets and supported the local unit. The US Fed has delivered a second consecutive 0.75 percentage point rate hike on expected lines in order to stamp out scorching inflation, but has stopped short of providing any clear guidance about the pace and quantum of future rate hikes. Markets are now hopeful that the US Fed might slow down the pace of its monetary tightening campaign amid waning growth momentum signaled by several high-frequency economic indicators.”

“Besides, strength in domestic equities has further underpinned the local unit. However, steady crude oil prices are still acting as a key headwind and capping gains in the local unit. The US GDP data for the second quarter will provide further cues about the health of the US economy and steer the path ahead for the local unit. Looking ahead, we foresee the Indian rupee to face initial resistance at the 79.40 mark, and only a move past the same would open the doorway for further appreciation towards the 79 mark in the near term.”

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.

Photos