The Indian rupee opened 21 paise higher at 82.59 per dollar on Wednesday amid rise in risk in global equity markets, FII inflows, and declining oil prices. “The rupee is likely to appreciate today on the back of weakness in dollar and optimistic global markets sentiments. Market sentiments improved in anticipation that the Fed could slow its plan for tightening financial conditions due to easing inflation. Meanwhile, a surge in crude oil prices will hurt the rupee. US$INR (December) is expected to trade in a range of 82.30-82.80,” said ICICIdirect in a note. In the previous session, rupee declined by 36 paise to close at 82.87 against the US dollar, weighed down by persistent foreign capital outflows from the capital markets.
Rupee near-term outlook
Amit Pabari, MD, CR Forex Advisors
“The rupee, in an attempt to break below 83 yesterday (close to an all-time low) amid the Indo-China tussle, when nifty is near its all-time high, oil prices are lower, and DXY was stable, otherwise less vulnerable rupee off late has fallen prey to the divergence that seems short-lived. Thanks to the CPI report which helped to pull it back near 82.50 levels later. Broadly, with the overall economic scenario in a bright spot, the rupee too is likely to gain its sunshine are retrace back close to 82.00-81.80 levels in the near to medium term. On flip side, the losses are likely to be capped near 83.00-83.20 levels, if any.”
Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services
“The US Fed concludes its two-day policy meeting today and is expected to announce a half-point interest rate increase. While that would be a smaller hike than implemented in the last four meetings, it would put rates at the highest level since 2007. Apart from Fed, the ECB and the BoE will also release their policy tomorrow and that is likely to trigger further volatility for the dollar. We expect the USDINR(Spot) to trade sideways and quote in the range of 82.20 and 82.80.”
Anindya Banerjee, VP – Currency Derivatives & Interest Rate Derivatives at Kotak Securities
“For a sustained divergence between Rupee and its peers, there need to be significant idiosyncratic factors impacting Rupee. As of now, we are not aware of any such significant permanent shifts in the demand-supply dynamics. Therefore, we still expect USDINR’s upside to be capped near 83.00 levels and it can slide towards 81.80 over the next 3-4 weeks. Positional traders can scale into shorts if using futures, but your stop will be above the all-time highs of 83.25 on spot.”
“Ideally, one can wait for a pullback toward the 82.80/83.00 zone to build shorts in the future. Another way to express a positional short view is through a put spread and then a butterfly. Put spread has a much higher cost than a butterfly but offers quick gains, in case the Rupee slides immediately, instead, in a put butterfly trade, one has to wait till expiry for pocketing decent gains. Key support levels are 82.50 and 82.10 on the spot and key resistances are 83.00 and 83.25 on spot.”
Anand James – Chief Market Strategist at Geojit Financial Services
“Break of 82.76 ushered in upsides that lasted all day. However, this move has now headed into a congestion region, while also in the vicinity of a record peak. This should prompt a pullback that could again let bulls regroup, once in the 82.17-82.46 band.”
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