The India Rupee is likely to depreciate on Friday on the back of a strong dollar, rise in crude oil prices and risk aversion in global markets. Market sentiments were hurt as major central across the globe signalled that interest rates will go higher despite recessionary fears. Additionally, investors will remain cautious ahead of manufacturing and services PMI data across major countries to gauge the economic health. “US$INR (December) is expected to trade in a range of 82.60-83.05,” said ICICIDirect. In the previous session, The local unit declined by 27 paise to close at 82.76 (provisional) against the US dollar after the US Fed’s interest rate hike and its hawkish stance dented investor sentiments. A massive sell-off in domestic equities and a strong greenback overseas also weighed on the local unit.
Rupee Outlook for 16 December, Friday
Anindya Banerjee, VP – Currency Derivatives & Interest Rate Derivatives at Kotak Securities
“USDINR spot closed 30 paise higher at 82.76. Rupee continues to remain one of the weakest currencies as demand for Dollars remain strong in the onshore market and lack of exporter selling and carry trades, keep supply low. A hawkish Fed also helped USD. Over the near term we expect a range of 82.25 and 83.00 on spot.”
Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services
“Volatility in rupee remained low even after the Fed in line with expectation raised rates by 50bps after raising interest rates by 75 basis points at four successive meetings. Yesterday, the ECB and the BoE raised rates by 50bps as inflation remains sticky. ECB staff projected that a recession should be relatively short-lived with limited growth for 2023 expected and has been revised down compared to previous projections.”
“Last month the BoE said Britain was entering a long recession, and predicted the economy would shrink by 0.3% in the final quarter of this year. Now it expects a fall of 0.1%, and for economic output in a year’s time to be 0.4% higher than previously thought as a result of budget measures that offered short-term stimulus. Today, focus will be on the final CPI number from the EZ and preliminary manufacturing PMI from the EZ, UK and the US. We expect the USDINR(Spot) to trade sideways and quote in the range of 82.40 and 83.05.”
Amit Pabari, MD, CR Forex Advisors
“A tug-of-war between the bulls and bears has kept the Rupee in dilemma and trade volatile. On the right side for rupee bulls, India’s trade deficit stood at $23.89 billion during the month, down from $26.91 billion in October. In the past three sessions, a stronger rupee in the early hours loses v/s the dollar post 1 pm, apparently due to heavy buying by the oil companies amid the Russian price cap as stated by the bankers. However, the divergence between the Rupee and the DXY would not be sustained for a long time. A mild recovery in forward premium could attract exporters to participate, which could limit the downside in the local pair. Overall, we expect the USDINR pair to top out near the 83.00-83.20 zone and correct back towards its fair value of 81.50-81.20 to 81.50 levels in the near term to medium term.”
Rahul Kalantri, VP Commodities, Mehta Equities
“The USDINR 28 December futures contract gained and held above 82.55 levels. On the daily technical chart the pair is trading above its resistance level of 82.55. RSI is fetching above 65 levels and MACD is also showing positive divergence on the daily technical chart. Looking at the technical set-up, the pair is showing positive divergence on the daily technical chart and also sustaining above 82.55 levels. If the pair sustains above 82.55, it could test its next resistance levels of 82.90-83.10; now 82.20 acts as a major support for the pair.”