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Rupee likely to depreciate on strong dollar, high crude oil prices, USDINR pair to trade in this range

Rupee is expected to depreciate further on Tuesday due to stronger dollar and higher crude oil prices. Further, pessimistic sentiments in the global markets may hurt the rupee. Additionally, consistent FII withdrawal from domestic markets will continue to put pressure on the rupee.

Rupee to dollar, dollar to rupee
Technically, on the domestic front, USD/INR March has breached major resistance of 76.00-76.02 on 3 March

The Indian rupee depreciated 1.05% to hit its lowest level against the US dollar on Monday amid soaring oil prices and continued outflows of foreign portfolio money on last trading session. The local unit is expected to depreciate further on Tuesday due to stronger dollar and higher crude oil prices. Further, pessimistic sentiments in the global markets may hurt the rupee. Additionally, consistent FII withdrawal from domestic markets will continue to put pressure on the rupee. US$INR (March) is expected to rise further towards 77.50 for the day, according to ICICI Direct.

Support remains near 76.70 and 76.40 levels: Kotak Securities

“Rupee faces quadrupole whammy: Higher US Dollar Index, higher oil prices and FPI outflows and carry trade unwinding. Our suggestion remains to be flexible in your approach and do not get fixated on long term view right now. Things can change overnight. Therefore, manage your risk well. Stick to long option spreads over futures. USDINR remains in uptrend. If spot manages to sustain above 77 levels, then it an aim for 77.90 levels. Support remains near 76.70 and 76.40 levels.”

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

“Rupee continued to remain under pressure and fell to fresh all-time lows following rising uncertainty between Russia and Ukraine and rally in global crude oil prices. Momentum has been towards rupee depreciation for the past few sessions as market participants remain on the edge following geopolitical tensions. This week, on the domestic front, industrial production number will be important to watch and that could trigger volatility for the currency. We expect the USDINR (Spot) to trade with a positive bias and quote in the range of 76.70 and 77.50.”

Tapish Pandey, Research Analyst, SMC Global Securities

“The dollar rupee likely to trade mixed after making all time high as global commodity currencies took a breather in their weeks-long rally. The benchmark U.S. 10-year Treasury yield rose slightly after touching its lowest level in two month which is indicating further strength for dollar. While On domestic front, foreign institutional investors (FII) pulled out again Rs 7,482.08 Crore from Indian markets as war in Ukraine has darkened global economic outlook.”

“The Dollar Rupee remains in uptrend and trading at overbought zone which is indicating limited upside momentum for now. However any dip of 20-30 paisa makes USIDNR trading setup more comfortable to trade on positive bias. For now dollar is facing resistance near 77.50-77.55 levels sustain above which may see 78.00 marks in near future while on flip side support is placed below 76.50 levels. Taking into consideration strong dollar, firm yield and FII outflows, we are expecting USDINR to trade in a range of 76.50-77.50 with positive bias hence we recommend to wait some dip of 20-30 paisa to buy on dip by keeping stop loss below 76.50 levels ( all near months future levels)”

Kshitij Purohit, Lead Commodity & Currency at CapitalVia Global Research

“The rupee fell to a new lifetime low against the US dollar on Monday. The Reserve Bank of India (RBI) is thought to have sold up to $1.5 billion in the spot market to assist stop the rupee from falling further. The rupee and government bonds fell sharply on Monday as the military crisis in Ukraine escalated, sending crude oil prices to 14-year highs, aggravating fears of greater domestic inflation and a widening current account deficit, according to traders. The rupee was also driven lower by global dollar gains amid a wave of risk aversion and a selloff in domestic markets.”

“Technically, on the domestic front, USD/INR March has breached major resistance of 76.00-76.02 on 3March and we saw continuation of the bullish momentum in the following day. In the upcoming session, we may witness prices getting challenged in 76.58-76.60 zone which is next immediate resistance zone. While on the downside, 76.18-76.15 levels may act as a relevant support area. We may also witness 15-SMA acting as a dynamic support on 15-Minute chart.”

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