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Rupee likely to depreciate on strong dollar, risk aversion in markets, USDINR pair to trade in this range

The Indian rupee has managed to clinch gains for the second consecutive session, while finding support at the key 76.70 mark, amid the softening of the dollar index and the renewed buying witnessed in the domestic equities.

Rupee Vs Dollar, usdinr, dollar to rupee
Indian rupee to hover in a range of 75.80-76.70 in the near term

The rupee is expected to depreciate today amid strong dollar and risk aversion in the global markets. “Risky assets are struggling to hold their momentum as US Fed is preparing to tighten their monetary policy aggressively by raising interest rates several times this year and unwinding its balance sheet. Further, investors will remain cautious ahead of Manufacturing data from major countries across globe. US$INR (April) is expected to trade in a range of 76.10-76.50,” said ICICI Direct. In the previous session, the local unit appreciated by 15 paise against the US dollar amid a weak greenback overseas and a rally in domestic equities.

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

“The Indian rupee has managed to clinch gains for the second consecutive session, while finding support at the key 76.70 mark, amid the softening of the dollar index and the renewed buying witnessed in the domestic equities. Risk sentiments have improved as the greenback has pulled back from the recent two-year peak tested early this week. Markets are now anticipating the ECB to start increasing rates as early as the start of the third quarter, with inflation hitting record highs in the EU.”

“However the overall macroeconomic landscape suggests that there is a lot of nervousness in the market due to the geopolitical risks, accelerating inflation, and prospects of an EU ban on Russian crude oil imports which is likely to keep the Indian rupee under pressure. Furthermore, increasingly hawkish statements from the Fed officials are leading to concerns about higher interest rates for the year ahead. Considering the dynamics, we foresee the Indian rupee to hover in a range of 75.80-76.70 in the near term.”

Praveen Singh, AVP- Fundamental currencies and Commodities analyst

“Indian Rupee has strengthened today amid risk on sentiments. Decline in the Dollar Index amid talks of ECB probably hiking rates in July is supporting the domestic currency. However, East European crisis and overall hawkish stance of the Federal Reserve will keep the gains in Rupee capped. Near term range is Rs 75.75 to Rs 76.50.”

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

“Rupee rose against the US dollar following gains in domestic equities but market participants remained cautious ahead of the important Fed Chairman speech that was scheduled yesterday. But in the overnight session the dollar index from its intraday lows after the Fed Chairman more or less confirmed about a half percentage point at the next policy meeting. On the other hand, Euro slipped from its one week high levels after after European Central Bank President Christine Lagarde said the ECB may need to cut its growth outlook further as the fallout from Russia’s invasion of Ukraine weighs on households and businesses. Today, focus will be on the preliminary manufacturing PMI number from the US, UK and the EU and better-than-expected economic data could extend gains for the greenback. We expect the USDINR(Spot) to trade with a positive bias and quote in the range of 76.05 and 76.50.”

Amit Pabari, MD, CR Forex Advisors

“The Indian Rupee is expected to open around 76.25 and is likely to trade in the range of 76.10-50. Domestic equities were seen recovering for the second consecutive day yesterday, but FIIs remained a net seller and in total, they have sold more than Rs. 15,000 worth of stocks and bonds in April. The other fundamentals are gloomy and doomy for the Rupee but RBI’s war chest of reserves has been a key point to consider for a steady move. Broadly, the pair is likely to trade into a consolidation phase of 75.70 to 76.70 with a mixed bias.”

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

“USDINR as of now is happy to oblige the option sellers. Huge open interest in options with strikes between 76.00 and 76.75 indicate that till April expiry, USDINR may remain within this range. However, we need to be alert to any external risks. As any large gaps or moves out of this range, mostly on the upside, can trigger more buying in futures from call sellers. For now, we would continue to focus on credit strategies to bet on the range. Even for upside bets, we have used the credit strategy of ratio call spread using May month options. This offers us flexibility, which is essential in the current situation.”

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