The Indian rupee appreciated by 27 paise against the US dollar on Friday, in line with regional currencies, following a retreat in crude oil prices and a rebound in domestic equity markets. At the interbank forex market, the local unit opened at 75.31 against the greenback and witnessed an intra-day high of 75.18 and a low of 75.46 before finally settling at 75.33, up 27 paise over its previous close. Rupee is expected to depreciate on Monday due to expectations of disappointing GDP data. Further, continuous FII fund outflows from domestic markets will weigh on the domestic currency.

Rupee likely to depreciate today: ICICI Direct

“The dollar index declined 0.54% on Friday amid rise in risk appetite in the global markets and decline in US treasury yields. However, improved macroeconomic data from the US and rising tensions in Ukraine cushioned a further decline in the dollar. Rupee February futures appreciated by 0.51% on the back of retreat in dollar and softer crude oil prices.”

“The rupee is expected to depreciate today due to expectations of disappointing GDP data from India. Further, continuous FII fund outflows from domestic markets will weigh on the rupee. Moreover, pessimistic sentiments in the global markets may continue to put pressure on the rupee. Additionally, investors will keep an eye on Chicago PMI data from the US. US$INR (March) is likely to rise towards 76.10 for the day.”

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

“On Friday, rupee consolidated in a narrow range but during the weekend escalation between Russia and Ukraine could keep the currency weighed down against the US dollar. Yesterday, President Putin put Russia’s nuclear deterrent on high alert in the face of a barrage of Western reprisals for his war on Ukraine. The 27-nation European Union on Sunday decided for the first time in its history to supply weapons to a country at war. The Russian rouble plunged nearly 20% to a new record low versus the dollar in early Asian trade after Western nations on Saturday unveiled harsh sanctions including blocking some banks from the SWIFT international payments system.”

“The EU shut all Russian planes out of its airspace, as did Canada, forcing Russian airline Aeroflot to cancel all flights to European destinations until further notice. In the strongest economic sanctions yet, the United States and Europe said on Saturday they would banish big Russian banks from the main global payments system SWIFT and announced other measures to limit Moscow’s use of a $630 billion war chest. Today, volatility would continue to remain elevated and escalation between the two nations is likely to keep the rupee weighed down. We expect the USDINR(Spot) to trade sideways with a positive bias and quote in the range of 75.20 and 76.00.”

Kshitij Purohit, Lead Commodity & Currency at CapitalVia Global Research

“The USD/INR pair is currently trading at 75.40, with profit-booking in the greenback at northern levels due to a slight expansion in risk appetite. The spot’s optimistic tone, on the other hand, hasn’t changed. The escalation of tensions between Russia and Ukraine has already pushed up oil prices, and India, as a major oil importer, is grappling with the consequences. This could result in a significant increase in the country’s fiscal imbalance, further depreciating the Indian rupee. Furthermore, the European conflict situation is pointing to an impending recession in Europe, which could put the Indian rupee on the defensive.

The Reserve Bank of India (RBI) will be pushed to raise interest rates due to rising inflation in India and rising oil costs, but the greenback will have the upper hand due to its predicted aggressive monetary policy and status as a “safe-haven” asset. India is looking into the possibility of establishing a rupee payment mechanism for commerce with Russia in order to mitigate the impact of Western sanctions placed on Russia following its invasion of Ukraine.

Technically, the spot pair is trading above 75.80 levels. Closing above 75.90 mark may trigger a good momentum on the upside and prices may face challenges near 76.10-76.12 which is the next major resistance level on hourly charts. On the downside, 75.55-75.52 may be seen acting as a minor support level, while major demand zone is intact at 75.00 levels which is a major psychological level too.”