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Rupee may depreciate on firm dollar, pessimistic global market sentiments; USDINR pair to trade in this range

The rupee is expected to depreciate today amid firm dollar and pessimistic global market sentiments. Market sentiments were hurt as investors are concerned over surging inflation, monetary policy tightening across major countries in the globe, economic slowdown and escalating geopolitical tensions.

Rupee vs dollar, dollar to rupee, usdinr
USDINR (Spot) to trade with sideways with a positive bias and quote in the range of 76.40 and 77.20

The Indian Rupee is likely to depreciate on Monday amid firm US dollar and pessimistic global market sentiments. Crude oil ticking higher, US Dollar Index at a 20-year high, US bond yields at the highest levels since 2018, equity markets under selling pressure remain key challenges for the Indian currency. In the previous session, Rupee slipped to 76.97 against the greenback during intra-day deals, hitting its all-time low before rebounding following a possible intervention by the Reserve Bank of India (RBI). The country’s foreign exchange reserves, too, dropped to $598 billion for the week ended April 29, down from its all-time high of $642 billion in the week ended September 3, 2021. The local unit ended the day at 76.93/$, dropping 67 paisa or 0.87 per cent from its previous close.

Rupee likely to depreciate on firm dollar: ICICI Direct

“The rupee is expected to depreciate today amid firm dollar and pessimistic global market sentiments. Market sentiments were hurt as investors are concerned over surging inflation, monetary policy tightening across major countries in the globe, economic slowdown and escalating geopolitical tensions. Moreover, market participants fear that rising crude oil prices will hurt India’s trade and current account. US$INR (May) is expected to trade in a range of 76.80-77.25.”

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

“USDINR spot closed 66 paise higher near 76.91 levels, after almost testing the previous all time high it scored on March 7th at 76.98. High oil prices, US Dollar Index at 20 year high ,US 10 year yield above 3% and weak equity markets, the list of negatives for Rupee is pretty long. However, we suspect aggressive intervention from RBI is keeping USDINR under 77. This week, we expect USDINR to break above 77 levels and test 773.0 on spot. Broad range can be between 76.60 and 77.30 on spot.”

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

“Rupee at the start of the week consolidated in a narrow range as market participants remained cautious ahead of the important FOMC policy statement. But to everyone’s surprise the RBI just before the Fed meeting came in and raised rates by 40bps and hiked CRR by 50bps. On the other hand, the Fed in its policy statement raised rates by 50bps and said that its $9 trillion balance sheet would be allowed to decline by $47.5 billion per month in June, July and August and the reduction would increase to as much as $95 billion per month in September. The dollar fell against its major crosses after the announcement as the size of balance sheet trimming was less than market estimates. But as the week came to an end the Bank of England too raised rates by 25bps to 1%.”

“The BoE sent a stark warning that Britain risks a double-whammy of a recession and inflation above 10% as it raised interest rates. Dollar continued to get support at lower levels after data showed the US economy added 428,000 jobs last month as compared to estimates of 391,000 job additions. Average hourly earnings increased 0.3% after advancing 0.5% in March. This week, on the domestic front investors will be awaiting the release of inflation and IIP data to gauge a view for the currency. We expect the USDINR(Spot) to trade sideways with a positive bias and quote in the range of 76.40 and 77.20.”

Tapish Pandey, Senior Research Analyst, SMC Global Securities

“The Dollar Rupee is likely to trade firm as sharply rising U.S. yields and an early skid on rate worries, while a tightening lockdown in Shanghai stoked concerns about global economic growth and possible recession. On the chart, USDINR future is trading on higher top and higher bottom chart pattern and also given a breakout from the previous swing high near 77.09-77.10 levels indicating positive momentum likely to countries. On the downside, support is placed around 76.88-76.90 levels, while on the higher side, resistance is seen around 77.47-77.49 levels sustain above which may edge higher towards 77.90-78.00 levels in near future. For the day, we are looking at USDINR future to trade in the range of 76.90 to 77.45 zones with positive biases. However, volatility is likely to persist ahead of last LIC IPO application day. Some flows are also expected.”

(The recommendations in this story are by the respective research analysts and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Market investments are subject to rules and regulations. Please consult your investment advisor before investing.)

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