Rupee likely to appreciate today amid retreat in dollar, USDINR pair to trade sideways with positive bias

The rupee is expected to appreciate today amid a retreat in the dollar but risk aversion in global markets, elevated crude oil prices and persistent FII outflows may prevent the rupee from gaining further strength. US$INR (January) is expected to trade in a range of 74.30-74.70.”

Rupee
USDINR pair to trade with a positive bias and quote in the range of 74.20 and 74.80

The India rupee snapped its 3-day losing streak on Wednesday to settle 14 paise higher at 74.44 (provisional) against the US dollar, tracking positive regional peers, even as the domestic equity markets ended in red. At the interbank foreign exchange market, the local unit opened lower at 74.70 a dollar, down 12 paise from the last close. During the day, it pared losses and witnessed an intra-day high of 74.32m before settling at 74.44 against the US greenback, up 14 paise over its last close. On Tuesday, the Indian currency slumped by 33 paise to close at a two-week low of 74.58 against the US dollar.

Rupee expected to appreciate amid a retreat in the dollar: ICICI Direct

“Rupee future maturing on January 27 appreciated by 0.25% amid retreat in dollar and on reports that Finance Minister Nirmala Sitharaman is likely to consider a capital gain tax waiver for overseas debt investors in the Union Budget. The rupee is expected to appreciate today amid a retreat in the dollar but risk aversion in global markets, elevated crude oil prices and persistent FII outflows may prevent the rupee from gaining further strength. US$INR (January) is expected to trade in a range of 74.30-74.70.”

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

“Rupee opened on a flat note but rose in the latter half of the session on suspected fund flows that hit the market. Recovery in domestic equities from lower levels also boosted the overall market sentiment. Dollar that has been getting support at lower levels following rise in US treasury yields also retraced from intraday highs. The greenback trimmed losses after data showed U.S. homebuilding unexpectedly increased in December amid unseasonably mild weather. Housing starts rose 1.4% to a seasonally adjusted annual rate of 1.702 million units last month. Yesterday, in the evening session U.S. 10-year Treasury yields touched a new two-year high of 1.9%.”

“The Fed will meet next week and will likely provide clarity and details on the end of quantitative easing, possibly in March. The U.S. central bank could also signal it will raise interest rates in March as well, right after ending QE. Pound, meanwhile, rose after data showed British inflation rose 5.4% in December, its highest level in 30 years, raising rate hike expectations. Talks of a leadership challenge to Prime Minister Boris Johnson, however, have kept the pound in check. Today, focus will be on the Philly Fed manufacturing index and weekly jobless claims to gauge a view for the dollar. We expect the USDINR pair to trade with a positive bias and quote in the range of 74.20 and 74.80”.

Rupee needs to sustain above 74.30 on spot for the uptrend to remain intact: Kotak Securities

“Yesterday there was a sharp pullback in USDINR on the back of large corporate $ inflows and then stop-loss selling from speculators and bank dealers. Corporate $ inflows have been a major savior of Rupee over the past few months, even when FPI has sold a significant quantity of stocks and bonds. With oil prices and the US yields both holding steady near their multi-year highs, USDINR should get strong support at lower levels. Technically, bias remains upward as long as the USDINR spot holds above 74.25 levels and futures above 74.30/35 levels. Resistance near 74.80/85”.

“USDINR still has scope for upside move as long as it holds above 74.35/40 on Jan futures. Global cues are looking neutral. Till Union Budget, four factors will drive sharp price swings in USDINR: (i) Oil price trajectory (ii) US interest post FOMC meeting (iii) trend of equity markets (iv) hopes of amendment in tax laws to allow for inclusion of GOIsecs in global bond indices. Inspite of the corrective dip on Wednesday, trend is upward. However, price need to sustain above 74.30 on spot for the uptrend to remain intact.”

Amit Pabari, MD, CR Forex Advisors

“The Indian Rupee is currently experiencing a roller coaster ride. The negative sentiment led by higher crude oil prices, strong jump in US yield to 2-year high, and recovery in US dollar index were weighing on the Rupee to quote near 74.70 in the first half of the session yesterday. However, it trimmed losses on bond issuance-related inflows from Indian Railway Finance Corporation (IRFC) worth approximately $400-500 million, SBI worth $350, and JSW infrastructure worth $400 million. These inflows helped Rupee to recover by almost 30 paise from day’s low. Today, the Indian Rupee is expected to open on a flat note near the 74.40 level and is likely to trade in the range of 74.20 to 74.70 with a mixed bias”.

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