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Rupee likely to remain rangebound on strong dollar, FII outflows; USDINR pair to trade sideways in this range

Today, focus will be on the durable goods and consumer confidence number from the US and better-than-expected economic number could extend gains for the dollar. USDINR(Spot) is expected to trade sideways and quote in the range of 76.05 and 76.80.

Rupee vs dollar, dollar to rupee, usdinr
Sharp decline in crude oil prices have cushioned the downside in Rupee

The Indian Rupee is likely to remain rangebound on strong dollar, persistent FII outflows. Concerns over resurgence of COVID-19 may also weigh on the domestic currency. Focus will be on the durable goods and consumer confidence number from the US and better-than-expected economic number could extend gains for the dollar. In the previous session, the rupee declined 26 paise against the US dollar tracking a strong greenback overseas and a lacklustre trend in the domestic equity markets. At the interbank foreign exchange market, the rupee opened lower at 76.58 against the American currency, and witnessed an intra-day high of 76.55 and a low of 76.77 before settling at 76.68, down 26 paise over its previous close.

Praveen Singh, AVP- Fundamental currencies and Commodities analyst

“Indian rupee declined yesterday amid risk-off sentiments in global markets. There are increased expectations that US Federal Reserve may hike interest rates by 50 bps in upcoming FOMC meet next week as indicated by Fed Chair Jerome Powell’s speech last week. There are expectations of further aggressive rate hikes in the coming months, too. Outflows of FII have also dented the domestic currency. On the other hand, sharp decline in crude oil prices have cushioned the downside in the domestic currency. We expect Rupee to remain under pressure on deteriorating global risk sentiments due to escalating tensions between Russia and Ukraine, and hawkish US Federal Reserve. Concerns over resurgence of COVID-19 may also weigh on Rupee. Rupee may trade in the range of Rs 76-77.20 in the next couple of sessions.”

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

“Rupee after opening on a flat note fell following broad strength in the dollar against its major crosses and weakness in domestic equities. Concern over higher inflation going ahead is also disturbing the market sentiment. The greenback has been strengthening after the Federal Reserve Chairman and his officials in their recent commentary have hinted towards aggressive rate hikes in the near future. The PBoC said it would cut the FX reserve requirement ratio (RRR) by 100 basis points to 8% beginning May 15, to “improve financial institutions’ ability to use foreign exchange funds”. Riskier assets did witness a bit of late recovery after this announcement. Today, focus will be on the durable goods and consumer confidence number from the US and better-than-expected economic number could extend gains for the dollar. We expect the USDINR(Spot) to quote sideways and quote in the range of 76.05 and 76.80.”

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

“USDINR managed a positive drift but intra-day range was around 15-20 paise. It seems, there are forces which are working actively to keep the volatility in check. Those forces are combination of central bank intervention, lumpy corporate inflows and carry traders keeping faith in the Rupee, due to hawkish RBI. Intermarket cues were positive for the US Dollar, as US Dollar Index was strong, Chinese currency was weak and the equity markets closed in the red. In such market conditions, a portfolio of option strategies workout well: strangle/straddle shorts and ratio call spread. Ratio call spread, as there is a positive drift.”

Rahul Kalantri, VP Commodities, Mehta Equities

“USDINR 27April futures contract extended its gains and tested its resistance level of 76.7000 again. USDINR rose after hawkish remarks from Fed Chair at the IMF debate raised expectations of higher interest rates in the US. Looking at the technical set-up, a pair is showing positive momentum on the technical chart and if it continues to sustain above 76.35 could show further strength towards 76.85-77.00; now 76.15 acts as major support for the pair on a daily closing basis.”

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