Rupee likely to appreciate against US dollar ahead of US GDP data; USDINR may trade in this range

The Indian Rupee is likely to depreciate on Thursday as traders may remain cautious ahead of the US GDP data. Expectation is that the number could come in better-than-estimates which would support the dollar at lower levels.

Rupee likely to appreciate against US dollar ahead of US GDP data; USDINR may trade in this range
USDINR spot price is expected to trade in a range of Rs 79.20 to Rs 80.80 in next couple of sessions.

The Indian rupee is likely to appreciate on Thursday amid weakness in US dollar. However, traders may remain cautious ahead of the US GDP data. Expectation is that the number could come in better-than-estimates which would support the dollar at lower levels and, in turn, will weigh on rupee. USDINR(Spot) is expected to trade with a positive bias and quote in the range of 79.70 and In the previous session, the local unit dropped sharply against US dollar, ahead of the US Federal Reserve meeting, as investors remained cautious and waited for guidance from Fed chairman Jerome Powell for near-term direction. Rupee fell 12 paise to close provisionally at 79.90 against the American currency.

“Rupee is expected to appreciate today amid weakness in US dollar. Further, investors will remain vigilant ahead of GDP (Q2) and Initial jobless claims data from the US. Initial jobless claims data is expected to rise from 251K to 253K. USDINR (Aug) is expected to trade in a range of 80.20-79.90,” said ICICIDirect.

Anuj Choudhary – Research Analyst at Sharekhan by BNP Paribas

“Indian rupee depreciated on overall strength in the US Dollar and concerns global economic recovery. IMF cuts India’s FY23 GDP forecast to 7.4% from 8.2% in the previous estimates, which also weighed on Rupee. Renewed outflows by FIIs also put pressure on Rupee. However, positive tone in the domestic equities cushioned the downside. We expect Rupee to trade on a mixed to negative note on strong dollar and aggressive rate hike by US Federal Reserve. Traders may also take cues from FOMC press conference for further guidance on future interest rate hikes. Markets may also take cues from pending home sales and durable goods orders which is expected weaker than previous month. Traders may also remain cautious ahead of the US GDP data today. USDINR spot price is expected to trade in a range of Rs 79.20 to Rs 80.80 in next couple of sessions.”

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

“Rupee consolidated in a narrow range and rose marginally ahead of the important Fed policy meeting that was scheduled yesterday. Momentum in the major crosses has been resilient ahead of the release of policy statement. 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 initially moved higher after the statement but quickly reversed course, and weakened further along with Treasury yields as comments from Fed Chair Jerome Powell after the policy statement were seen as dovish.

“Powell said the Fed’s efforts to reduce its balance sheet had also been accepted by the markets, which “should be able to absorb it.” Today, focus will be on the advance GDP number that will be released from the US; expectation is that the number could come in better-than-estimates and that could support the dollar at lower levels. We expect the USDINR(Spot) to trade with a positive bias and quote in the range of 79.70 and 80.40.”

Amit Pabari, MD, CR Forex Advisors

“An increase in Fed’s interest rates will heap pressure on Asian counterparts viz-a-viz India to speed up monetary tightening to avoid the risk of further outflows and weaker currencies. With the RBI gearing up for the MPC meeting in the upcoming week, the focus will turn on how aggressively RBI keeps up its pace of rate increase to offset the effect of Fed hikes. So far, RBI has kept a strong hold on USDINR above 80 levels and curbed the rupee depreciation.”

“Also, the unwinding of the open interest position yesterday didn’t move the rupee much as the RBI might have intervened heavily to avoid a sharp move as seen in the June expiry. However, the USDINR seems to have been trapped in a narrow range between 79.70 to 80.10 levels and shall continue until a fresh trigger leads a move. A breakout on either side of the range would further move the USDINR by 1 rupee on the side of the breakout.”

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