Rupee likely to depreciate amid rising crude prices; USDINR pair to trade in this range

The rupee is expected to depreciate on Friday amid a rise in crude oil prices. Further, investors will closely watch forex reserves data from India for more clarity.

Rupee likely to depreciate amid rising crude prices; USDINR pair to trade in this range
USDINR(Spot) to trade sideways and quote in the range of 79.20 and 79.80

The rupee is expected to depreciate on Friday amid a rise in crude oil prices. Further, investors will closely watch forex reserves data from India for more clarity. “US$INR (August) is likely to trade in a range of 79.60-79.80,” said ICICIDirect. In the previous session, rupee depreciated 19 paise against the US dollar, following the strength of the American currency in the overseas market. At the interbank foreign exchange market, the local currency opened at 79.60 and moved in a range of 79.60 to 79.71 during the day. It finally ended at 79.64 against the greenback, down 19 paise over its previous close.

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

“Rupee consolidated in a narrow range after Federal Reserve officials saw “little evidence” late last month that U.S. inflation pressures were easing, and steeled themselves to force the economy to slow down to control an ongoing surge in prices. In the evening session the dollar rose sharply as Federal Reserve officials spoke of the need for further rate hikes. A string of U.S. central bank officials said that the Fed needs to keep raising borrowing costs to bring high inflation under control.”

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“However, consumer price inflation and jobs data for August, due before the Fed’s September meeting, will likely affect the size of a rate hike. Data released yesterday showed the number of Americans filing new claims for unemployment benefits fell last week and the prior period’s data was revised sharply lower. Today, volatility for the dollar could remain low as no major economic data is expected to be released from the US. Pound has been under pressure in the last few sessions and today will be taking cues from the retail sales number from the UK. We expect the USDINR(Spot) to trade sideways and quote in the range of 79.20 and 79.80.”

Dilip Parmar, Research Analyst, HDFC Securities

“Taking cues from the regional currencies, the Indian rupee could open lower at domestic bourses. The overnight gain in the dollar index, higher crude oil prices, foreign fund selling in equities and corporate dollar outflows continue to weigh on the domestic currency. On Thursday, spot USDINR gained 23 paise or 0.29% to 79.68. The pair consolidating in the narrow range of 79.20 to 79.85 since August 04.”

“Today could be the day where we can see an upward breakout following weekly expiry and risk-averse sentiments. However, the medium-term consolidation can continue before the decisive up trend. Asia currencies to weaken further versus the dollar in coming weeks amid ongoing global growth fears and the possibility of more hawkish Federal Reserve rhetoric.”

Kunal Sodhani, VP – Global Trading Center, Shinhan Bank

“Upbeat US jobs data, added to industrial production and retail sales, gives enough ammunition for another 75bps Fed rate hike in September. A slew of Fed speakers keep the doves grounded and dollar bears in hibernation. Oil rebounded. For USDINR, 79.50 remains a support while 79.95/97 a resistance.”

Amit Pabari, MD, CR Forex Advisors

“The strength in the US dollar index is once again rejuvenated as it climbs to the monthly high around 107.50 being able to find the push from the firmer US jobs data and the hawkish comments from the Fed members. Although the tone was such that the investors are now expecting a greater chance of a 50 bps interest rate hike in September instead of a 75 bps, their firm reactions against the inflation reiterated the hawkish sentiments. Additionally, the poor risk sentiments in the markets related to the growing concerns in China and Europe and the ongoing tussle between US and China can keep the dollar on the front foot. Oil on the other end remained firm as the US crude inventories fell sharply in the recent week, indicating a strong demand for oil which could not ease off the inflationary pressure that soon, keeping the Fed well placed on aggressive tightening.”

“On the domestic front, the rupee is opening weaker near 79.70 levels following the revival of strength in the US dollar and capital outflows. While the positive factors have played well for the rupee keeping it in a range with FII’s being bullish on India in August by investing over $5 billion and the oil prices remaining under control. But the real struggle lies with maintaining the current pace of inflows in September amid the uncertain global environment, domestic dollar requirement, the rising US interest rates, and the dollar crunch led by the Fed doubling the quantum of QT in September. The actions from RBI will be closely watchful as and when the situation globally becomes challenging particularly with the US dollar strength. Earlier, the bank intervened heavily to protect 79.80 and 80 levels. If the pair breaks the same, a further move of 50 paise to 1 rupee can be expected. Whereas, on the flip side, 79.20 seems to remain protected in the near term.”

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