Rupee likely to depreciate on strong dollar, elevated crude prices; USDINR to trade with positive bias

The Indian Rupee is likely to depreciate on Friday amid strength in US dollar, elevated crude oil prices and fears of aggressive rate hike by US Fed next week. Positive risk sentiment in domestic, global equities, FII selling slowdown may cap the losses.

Rupee likely to depreciate on strong dollar, elevated crude prices; USDINR to trade with positive bias
Rupee may fall further on Friday. The overall bias in USDINR Spot is towards the upside

The Indian Rupee is likely to depreciate on Friday amid strength in US dollar, elevated crude oil prices and fears of aggressive rate hike by US Fed next week. Positive risk sentiment in domestic, global equities, FII selling slowdown may cap the losses. The overall bias in USDINR Spot is towards the upside, according to forex analysts. In the previous session, rupee recovered from its all-time low of 80.06 to close 20 paise higher against the US dollar, following overall weakness in crude oil prices and fresh foreign fund inflows. At the interbank forex market, the local unit opened lower at 80.03 and fell further to an intra-day low of 80.06 before recovering and finally settling at 79.85 against the greenback.

Heena Naik, Research Analyst – Currency, Angel One

“The rupee has crossed the 80-mark while the inflation rate is sitting above 7 per cent; something that both local and global investors are worried about. Considering certain uncertain factors, USDINR Spot is expected to remain in the bullish territory for some more time as the FOMC Policy is around the corner which may push the US Dollar Index higher. A possible uptrend towards 81.00 levels is very much possible in a monthly time frame. We may see some in-between strengths in the Rupee due to dollar selling by the RBI which would try its best to intervene. The overall bias in USDINR Spot is towards the upside.”

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

“Rupee consolidated in a narrow range and rose marginally ahead of the important ECB policy meeting that was scheduled yesterday. The ECB raised its benchmark deposit rate by 50 basis points to zero percent, breaking its own guidance for a 25 basis point move as it joined global peers in jacking up borrowing costs. The dollar weakened after the release of the ECB policy statement and focus will now shift to preliminary manufacturing and services PMI number that will be released from the EU, UK and the US. Better-than-expected economic data could extend gains for the dollar. We expect the USDINR(Spot) to trade with a positive bias and quote in the range of 79.70 and 80.40.”

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

“USDINR spot closed 5 paise lower at 79.93, thanks to fall in oil prices, corporate inflows and some central bank intervention. It seems market is unable to sustain above 80 levels. Today as well, after making a fresh all time high at 80.06, prices closed lower. Over the near term, we could see prices oscillate within a range of 79.70 and 80.20 on spot.”

Amit Pabari, MD, CR Forex Advisors

“The USDINR pair crossed 80.00 mark yesterday once again testing the levels. However, sustenance above the same was a struggle amid RBI’s intervention and exporter’s selling which signifies that it will take a few more sessions to convincingly break the levels before it moves towards 80.50 levels. On the flip side, the USDINR pair haven’t been able to break 79.80 levels either, keeping the range quite compressed. For the rupee, until the fundamentals are negative, the view of further depreciation remains intact with RBI continuing to use its reserves to lower the pace of depreciation, with the expected range of 79.70 -80.30 in the short term.”

Dilip Parmar, Research Analyst, HDFC Securities

“The Indian Rupee could mark the first weekly gain after an eleventh weekly loss as foreign inflows return amid cheap local currency and valuation. Weakness in the dollar index and lower crude oil prices are likely to support the rupee in today’s trade. On Thursday, spot USDINR fell 4 paise to 79.95 after briefly consolidating in a narrow range. The pair is still bullish trend while bulls might be out of fuel around 80 and unwinding or booking profit on central banks’ dollar supply. The pair is having near-term resistance at 80.30 and support at 79.70.”

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