The Indian rupee is likely to depreciate on Monday amid strong dollar and weak global market sentiments. However, consistent FII inflows and decline in crude oil prices may prevent further fall in rupee, according to analysts. USDINR (Nov) is likely to trade towards the level of 82.05. In the previous session, rupee depreciated against the US dollar amid a lacklustre trend in domestic equities and firming crude oil prices. However, a weak dollar in the overseas market and fresh foreign capital inflows restricted the loss. At the interbank foreign exchange market, the local unit opened up at 81.59 and settled at 81.70 against the greenback, registering a fall of 6 paise over its previous close of 81.64.
Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services
“Rupee continued to trade in a narrow range in the first half of the session and, on Friday, rose in the latter half of the session and extended gains after as U.S. Treasury yields increased and investors eyed hawkish comments from Federal Reserve officials. Meanwhile, softening of crude oil prices and FII inflows into local markets prevented further depreciation in the currency. Latest data released on the domestic front showed India’s trade deficit has widened to $26.91 billion from $25.71 billion in September 2022.”
“Dollar could again strength as US Fed officials statements signaled that Fed would continue to lift rates to combat inflation which is running hot. Fed is likely to reduce the size of rate increases in the coming future but it does not mean that it is close to pivoting away from raising rates. Moreover, yields are rising on anticipation that Fed will continue to remain on its path of tightening monetary policy. Today, no major economic data is expected to be released from the US and that could keep the dollar volatility low for the dollar. We expect the USDINR(Spot) to trade sideways and quote in the range of 81.20 and 81.80.”
Heena Naik- Research Analyst – Currency, Angel One Ltd
Since the past few days, the Indian Rupee has been trading with a strong bias; giving a ray of calmness to all the distressed importers. The recent strength in Rupee has narrowed the difference between the onshore and offshore Rupee price prompting market participants to reverse arbitrage positions. This has led to a fall in forward premiums. Going forward, USDINR Spot is likely to move higher towards 82.00-82.40 levels in the next week as recent slump in the currency shall prompt the importers to make opportunistic dollar purchases. Also, the Dollar Index has changed its path to north due to hawkish remarks from Federal Reserve officials and stronger-than-expected retail sales data which could further influence the trend of USDINR negatively.”
Anuj Choudhary – Research Analyst, Sharekhan by BNP Paribas
“Indian Rupee depreciated by 0.04% on strong Dollar and weak domestic markets. However, FII inflows cushioned the downside. Dollar gained as FOMC members continued to reiterate hawkish stance and upbeat economic data from US. Housing data and weekly unemployment claims topped estimates. On the other hand, disappointing Philly Fed manufacturing index capped sharp gains in Dollar. We expect Rupee to trade with a negative bias on Dollar demand from importers and strength in Dollar amid concerns over global economic recovery. However, weakness in crude oil prices may cushion sharp downside. Investors may also remain cautious ahead of existing home sales and CB-leading index data from the US. USDINR spot price is expected to trade in a range of Rs 80.80 to Rs 82.50.”
Amit Pabari, MD, CR, Forex Advisors
“There has been notable buying of the USD last week as the pair jumped from 80.50 to 81.90 levels. The future trend of the pair will be guided by the development of global and domestic factors. On the central bank’s intervention side, it is estimated that they have bought approximately $8 billion from the market in less than 30 days, majorly they might have bought in the range of 80.50-81.00 zone, simultaneously piling up the foreign-currency reserves and strengthening Rupee liquidity by as much as Rs 67,000 crores since the Diwali week.”
“The latest FX reserves data suggests that kitty rose by $14.72 billion in the week ended November 11, the biggest weekly jump in the last 15 months, although some portion of a rise could be on account of revaluation and MTM. Looking forward, the 81.80-82.20 zone, which had acted as a support before US CPI, will now act as a resistance for the pair. Surely, selling could grab the attention in this range, and thus exporters should grab this opportunity to cover some portion of their exposure. Overall, we expect the pair to trade in a range of 81 to 82.20 in the near term.
Anindya Banerjee, VP – Currency Derivatives & Interest Rate Derivatives at Kotak Securities Ltd
“We are approaching the year end. Market will gradually thin out in terms of liquidity, as we move closer to Christmas. Most professional traders cut down on their position as they go on Christmas and New Year leave. So, markets, esp. FX gets into a range, unless there is some large or big price-sensitive news. This year’s last FED meeting is on Dec 14. Most likely traders will wait until FED meeting and post that will gradually even out their position, before moving onto their Christmas break.”
“Moreover, given the sharp correction in dollar index in last 15/20 days, we expect dollar to consolidate, basically see a time correction. From INR perspective, rupee looks to trade in a range (81-82) on spot with a limited downward biasedness. Limited, because trade deficit still remains north of $25 billion. Periodically, we may rupee to appreciate on good news like lower oil but higher deficit may put a floor.”
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