Rupee likely to depreciate in near-term, may breach 85-mark in 2023; USDINR to trade in this range | The Financial Express

Rupee likely to depreciate in near-term, may breach 85-mark in 2023; USDINR to trade in this range

Rupee is expected to depreciate in near-term as global and local markets still look gloomy. USDINR pair may breach 85-mark.

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Indian Rupee likely to depreciate on elevated crude oil prices. Rising risk in global equity markets may cap losses.

The Indian Rupee is likely to depreciate on Thursday mainly on the back of a surge in crude oil prices. Oil prices rallied after data showed larger than expected draw in US crude stockpiles. Meanwhile, weakness in dollar and optimistic global markets sentiments may prevent a sharp fall in the local currency. Additionally, RBI’s monetary policy meeting minute showed governor Das believed rate hikes should continue in India. “US$INR (December) is holding strong support near 82.60 level. As long as it sustains above this level rupee may slip back to 83.00 level,” said ICICIdirect. In the previous session, rupee declined 10 paise to settle at 82.80 (provisional) against the US dollar as a massive sell-off in domestic equities and risk aversion in global markets dented investor sentiment.

Rupee to depreciate on deteriorating risk sentiments

“Indian Rupee appreciated by 0.03% on Wednesday on weak Indian markets and a positive US Dollar. Asian markets declined on concerns over a spurt in COVID-19 cases in China and parts of South Asia and US. Dollar also inched higher after yesterday’s decline on safe-haven appeal amid rising fears of another wave of COVID-19. We expect Rupee to trade with a negative bias on deteriorating risk sentiments amid rising COVID-19 cases and a slight recovery in US Dollar. Surge in crude oil prices may also put downside pressure on Rupee. USDINR spot price is expected to trade in a range of Rs 82.20 to Rs 83.30,” said Anuj Choudhary – Research Analyst at Sharekhan by BNP Paribas.

USDINR to trade sideways in 82.40 – 83.05 range

“Rupee traded in a narrow range and volatility remained low despite weakness in domestic equities. Yesterday dollar strengthened after consumer confidence in the US came in better-than-estimates. Data showed consumer confidence rose to an eight-month high in December as inflation retreated and the labor market remained strong while 12-month inflation expectations fell to 6.7%, the lowest since September 2021. Today, focus will be on the final GDP number from the US; expectation is that the number could remain unchanged compared to the previous number and thereby restrict the volatility for the dollar. We expect the USDINR(Spot) to trade sideways and quote in the range of 82.40  and 83.05,” said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.

Rupee may trade in 82-83 in near-term

“We can see the USDINR pair trading into the consolidation phase in the range of 82.50 to 83 zone in the last two weeks. However, the RBI could intervene in the spot market to curb any upside movement in the pair. The USD/INR forward premium added to last week’s surge with the 1-year implied yield rising to 2.06%, the highest in over three weeks, which could attract more dollar selling from exporters. Well, it will be hard for the USDINR pair to cross the 83.00 mark tracking stronger EM currencies & weaker USD. And thus we can expect a range of 82 to 83 over the next few days with a higher possibility of back to a fair value of 81.50-81.00 over the next 1 to 1.5 months,” said Amit Pabari, MD, CR Forex Advisors.

Rupee may breach 85-mark in 2023

“For the year 2023, we may see the Indian Rupee weakening in the initial part of the year as global and local markets still look gloomy. Any unusual move by the US Feds and RBI shall invite volatile swings in the DXY and USDINR. Not forgetting the gruesome covid state in China which is likely to play with one of the world’s largest economies i.e., China thereby hampering other Asian economies too including India. In addition, the macro fundamentals of India still aren’t in a good shape. Hence, the first half of 2023 shall keep the USDINR on the upper side. There is a possibility of USDINR breaching the 85-mark. The second half of 2023 shall see some easing. Prime support remains at 80.00 – 78.00 levels on the downside,” said Heena Naik- Research Analyst – Currency, Angel One.

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First published on: 22-12-2022 at 09:00 IST