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Rupee may appreciate on softening crude prices, rising risk appetite in markets; USDINR to trade in this range

The Indian Rupee is expected to appreciate on Wednesday amid risk in risk appetite in the global markets and softening of crude oil prices. Meanwhile, sharp appreciation in the domestic currency may be prevented as investors will remain vigilant ahead of US Federal Reserve monetary policy.

Rupee vs dollar, dollar to rupee, USDINR
Strong US Dollar Index and fragile equity markets are USD supportive, whereas RBI intervention and LIC related flows are Rupee positive. Therefore, it can be rangebound.

The Indian Rupee is expected to appreciate on Wednesday amid rising risk appetite in the global markets and softening of crude oil prices. Meanwhile, sharp appreciation in the domestic currency may be prevented as investors will remain vigilant ahead of US Federal Reserve monetary policy. “US$INR (May) is expected to trade in a range of 76.45-76.85,” said ICICI Direct. The rupee closed flat against dollar in the previous session amid forex outflows. Subdued domestic equities offset the impact of a sharp decline in global crude oil prices. A strengthening American currency overseas and continuous foreign fund outflows also weighed on the domestic unit, according to forex traders.

Rupee may appreciate: ICICI Direct

“Rupee is expected to appreciate today amid risk in risk appetite in the global markets and softening of crude oil prices. meanwhile, sharp appreciation in rupee may be prevented as investors will remain vigilant ahead of US Federal Reserve monetary policy. Fed is likely to raise interest rates by 50bps and announce plans to reduce its $9 trillion balance sheet in its upcoming policy meet. More focus will be on comments about how high interest rates might rise beyond this year to combat stubbornly high inflation. US$INR (May) is expected to trade in a range of 76.45-76.85.”

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

“USDINR spot closed 9 paise higher at 76.52, in a day of lackluster trading. With a truncated week, traders are staying away from taking large bets ahead of US FOMC meeting on Wednesday. Our bias continues to be a range, between 76 and 77. Strong US Dollar Index and fragile equity markets are USD supportive, whereas RBI intervention and LIC related flows are Rupee positive. Therefore, it can be rangebound.”

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

“Rupee continued to trade in a narrow range despite weakness in domestic and global equities and strength in the dollar against its major crosses. Market participants remained cautious ahead of the important FOMC policy statement. Expectation is that the central bank could raise rates by 50bps and also maintain a hawkish stance. The Fed is also expected to make an announcement on the balance sheet trimming and that is likely to extend further gains for the dollar. From the US, private payrolls number too will be released today and could set a platform for the non-farm payrolls number that will be released on Friday. We expect the USDINR(Spot) to trade sideways and quote in the range of 76.20 and 76.80.”

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