Rupee likely to depreciate further on strong dollar; USDINR pair to trade in this range

The rupee is expected to depreciate on Friday amid strong dollar. However, investors will remain vigilant ahead of US CPI data, which could provide clues on the future path of monetary policy tightening.

rupee vs dollar, dollar to rupee, usdinr
US$INR is expected to continue its upward trend and break its key resistance level of 77.95

The rupee is expected to depreciate on Friday amid strong dollar. However, investors will remain vigilant ahead of US CPI data, which could provide clues on the future path of monetary policy tightening, according to ICICI Direct. “US$INR is expected to continue its upward trend and break its key resistance level of 77.95. We expect US$INR to trade in the range of 77.80 to 78.00,” the brokerage said. In the previous session, rupee depreciated against the US dollar, weighed down by elevated crude oil prices and persistent foreign capital outflows. At the interbank foreign exchange market, the local unit opened lower at 77.74 against the greenback and touched an all-time low of 77.81 intraday before it finally settled at 77.76, down 8 paise over its previous close.

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

“Dollar consolidated in a narrow range despite gains in domestic equities and broader gains in the dollar against its major crosses. Earlier this week, the RBI decided to raise rates and dropped its “accommodative” stance, signalling stricter tightening ahead to fight soaring inflation. Broader gains in the dollar have been ahead of inflation data that will be released from the US later today. Next week, focus will be on the FOMC policy statement and that is likely to trigger further volatility for the dollar that has been gaining strength steadily. We expect the USDINR(Spot) to trade with a positive bias and quote in the range of 77.40 and 78.20.”

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

“Once more a quiet day as USDINR danced close to its all time high, near 77.88 on spot. Today’s high was 77.80. Possibly RBI intervention kept the pair in check. At the lack of large-scale positioning from speculators indicates that market still does not have the force to push prices higher. As a result, option remains the game in town, along with dip buying using futures. As long as spot is not breaking below 77.40, bias remains upward.”

Amit Pabari, MD, CR Forex Advisors

“On Thursday, the local currency was seen tumbling to an all-time low against USD around 77.81 after Adani’s outflow was heard over the street. Fortunately, RBI managed to protect from a sharp slide. The question remains with us- until when RBI will be able to control the Rupee against the weaker fundamentals? Today, the Rupee is about to open near a record low of 77.80 and is expected to trade in a range of 77.60 to 78.00 with a weakening bias. The focus turns towards today’s US CPI data as recently energy prices in the US have been again on a bullish ride.”

“In nutshell, higher than expected US inflation could again send US yields higher, equities lower and the US dollar higher against the DM and EM currencies. Against this backdrop, RBI’s approach could suppress the aggressive volatility and rates. Overall, the pair is expected to face resistance near 77.80-85 levels. If it convincingly trades above this level then further move towards 78-78.10 can be expected. On flipside, 77.40-50 zone will act as a crucial short-term support.”

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