The Indian rupee is expected to appreciate on Tuesday amid softening of crude oil prices and optimistic domestic market sentiments. Meanwhile, strong dollar and consistent FII outflows will hurt the currency. Further, market will stay vigilant ahead of major economic data from US. Rupee appreciated against the US dollar in the previous session, supported by positive domestic equities and a fall in global crude oil prices. However, a strengthening American currency overseas and concerns over renewed foreign capital outflows capped the gains in the domestic unit. At the interbank forex market, the local unit opened weak at 76.36 against the greenback. It witnessed an intra-day high of 76.15 and a low of 76.38 before settling at 76.16, registering a rise of 8 paise over its previous close.
Anindya Banerjee, VP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities
“USDINR spot closed 3 paise lower at 76.15. Year end selling from corporates was absorbed by bids from oil marketing companies. Over the near term, USDINR is expected to remain range bound between 75.75 and 76.50.”
Gaurang Somaiya , Forex & Bullion Analyst, Motilal Oswal Financial Services
“Rupee continues to consolidate in a narrow range despite volatility in global crude prices and marginal strength in the dollar against its major crosses. Yesterday, crude prices came down after Shanghai launched a lockdown to curb a surge in COVID-19 infections, prompting renewed fears of demand destruction. Investors also expect that supply deficits are looming, meanwhile, with April spot volumes of Russian crude expected to struggle to find buyers.”
“Japanese Yen fell sharply against the US dollar after the BOJ defended its 0.25% yield cap by offering to buy an unlimited amount of government bonds (JGBs) for the first four days of this week. Big energy import bills and the loss of tourism revenues mean the weight on the yen is likely to remain for the next year. Today, focus will be on the consumer confidence number that will be released from the US and better-than-expected number could extend gains for the dollar. We expect the USDINR(Spot) to trade with a positive bias and quote in the range of 75.80 and 76.50.”
Amit Pabari, MD, CR Forex Advisors
“Today, the Indian Rupee is expected to open sharply higher around 75.95 and it is likely to trade in the range of 75.75 to 76.25 with a downside bias. The reasons for the recent appreciation could be RBI’s active intervention near 76.40-50 as can be observed through recent FX reserve data, recovery in the Global equity markets despite the ongoing Ukraine-Russia war, a fall in Oil by almost 10% over the last 3 sessions as a nine-day lockdown in the Chinese city of Shanghai heightened demand concerns, Financial Year-end corporate adjustment-based dollar inflows and Mandatory hedging for companies- those companies having Risk management policies in placed and uncovered went on covering through forwards. And hence, we are seeing a sharp drop in the longer-term forward premiums.”
“Obviously, Rupee is trading against the broader picture of weaker fundamentals in the near term. The Russia-Ukraine tension remains a key risk for the market. On the macro side, Crude oil above the $100 mark, rising other commodities, overshooting inflation, FII’s huge outflow and a stronger dollar on hawkish Fed will surely make the depreciating story on for the Rupee in FY23. Overall, we can expect the pair to have limited downside up to 75.50 to 75.70 zone. And from there on, a bounce towards 76.50 to 76.70 can again be seen on the cards.”