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Rupee likely to depreciate amid strong dollar, elevated crude prices; USDINR pair to trade in this range

The rupee is expected to depreciate today amid rising crude oil prices and strong US dollar. However, investors will closely watch US GDP QoQ (Q1) data as it is expected to drop by 1.5%. US$INR is expected to surpass the hurdle of 78.06 to continue its upward trend

Rupee vs dollar, dollar to rupee, usdinr
Rupee is expected to open slightly lower and head for a worst quarterly decline after March 2020

The rupee is expected to depreciate today amid rising crude oil prices and strong US dollar. However, investors will closely watch US GDP QoQ (Q1) data as it is expected to drop by 1.5%. US$INR is expected to surpass the hurdle of 78.06 to continue its upward trend towards the level of 78.20, according to ICICIDirect. The local unit fell to a another lifetime low of 78.87 against the greenback, its second in as many weeks, as unabated FII selling by overseas investors and an unusual surge in demand from importers took the domestic currency to the brink of 79 in the worst performance for the day by an Asian currency. However, sporadic dollar sales by the Reserve Bank of India helped contain losses.

Dilip Parmar, Research Analyst, HDFC Securities

“Rupee is expected to open slightly lower and head for a worst quarterly decline after March 2020. The risk-averse sentiments, higher crude oil prices, weaker regional currencies, slower growth, higher CAD and foreign fund outflows are the few factors to mention for the rupee depreciation. The sentiment for the rupee remains bearish till we see improvement in domestic macro and foreign fund inflows.”

“Spot USDINR is expected to open higher and crossing 78.85 will pave way for 79.05 while the support has been shifted to 78.40, the recent top resistance. Looking ahead, the start of July can be pivotal for trend followers, and volatility is piling up around upcoming central bank meetings. A sudden policy shift could upset an anticipated seasonal calm in market activity.”

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

“Rupee continued to remain under pressure and fell to fresh all-time lows following broader strength in the dollar and also as global crude oil prices started to move higher. Dollar rallied against its major crosses after data released earlier this week from the US came in better-than-estimates. Today, focus will be on the final GDP number from the US; expectation is that the economy could contract 1.5% thereby raising more concern over the slowdown of the US economy. At the same time, a few major central bank governors will be coming out with their statement and any hawkish outlook is likely to support the dollar at lower levels. We expect the USDINR(Spot) to trade with a positive bias and quote in the range of 78.70 and 79.20.”

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

“USDINR closed at a fresh all time high at 78.77 on spot, up 43 paise. There seems to be relentless demand from offshore market and also from carry traders looking to unwind their shorts in USDINR. In the morning expiry related buying pushed the pair higher. The move higher has continued even after the closing on spot. Spot reference is now quoting 78.92 in the offshore market. Bias remains upward. Range can be 78.50 and 79.40 on spot.”

Anuj Choudhary – Research Analyst at Sharekhan by BNP Paribas

Indian rupee touched an all-time low of 78.79 against the US Dollar on Tuesday amid weak domestic equities and surge in crude oil prices. Sustained selling by foreign investors also put downside pressure on Rupee. FII outflows were reported at around Rs. 1,278 crores Monday. However, weaker US Dollar Index has cushioned a sharp fall in Rupee. Rupee is expected to trade on a negative note on risk aversion in domestic markets and continued selling pressure from FIIs. Elevated oil prices may also weigh on the domestic currency. However, US Dollar continues to remain weak amid easing inflation concerns and a rebound in risk assets. Rupee may trade in the range of 78-79.50 in near-term.”

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