The Indian rupee is likely to depreciate amid strength in US Dollar, elevated crude prices and risk aversion in global markets. USDINR may trade in a range of 78.70 and 79.50 on spot. India’s Chief Economic Advisor V Anantha Nageswaran on Tuesday said India is not defending the rupee. “I don’t think Indian fundamentals are such that we need to defend the rupee. The rupee can take care of itself,” he said. In the previous session, rupee appreciated against the US dollar, tracking the American currency’s decline versus its major peers and foreign fund inflows. At the interbank forex market, the local unit opened at 79.30 against the greenback, and ended at 79.17, up 36 paise from its previous close.

Dilip Parmar, Research Analyst, HDFC Securities

“The Indian rupee is expected to open sharply lower and could whip out Tuesday’s gains, following overnight strength in the dollar index. Wall Street stocks suffered the steepest drop in more than two years after data showed US inflation was running hotter than expected. US Rate traders signal there’s a chance for a 100bps hike next week after higher expected CPI reading. The forward markets indicate USDINR could open around 79.55. On Tuesday, spot USDINR fell 38 paise or 0.48% to 79.15, the largest intraday decline after July 27. Technically, the pair is having support at 78.70 and resistance at 79.65.”

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

“USDINR spot closed 38 paise lower at 79.14, lowest level since 3rd August, thanks to robust FPI flows and risk on sentiments in the global markets. It is not just the spot which has dropped, even forward premium has dropped due to exporter hedging and shrinking interest rate differential between India and US. A lower forward premium can be concerning when the mood in global markets turns sour but as long as oil prices remains low and equity markets higher, Rupee can remain well supported. We are looking forward to a range of 78.70 and 79.50 on spot.”

Sugandha Sachdeva, Vice President – Commodity and Currency Research, Religare Broking

“The Indian rupee has perked up by around 0.45%, appreciating on the back of strong portfolio inflows, as well as the recent slide witnessed in the dollar index from two-decade highs.There are a lot of concerns about the faltering global economic backdrop, but domestic equities are cruising higher amid improving risk sentiments which supports an appreciation bias for the domestic currency. Besides, stable oil prices are further aiding the outlook for the domestic currency. However, as per the latest data, headline retail inflation has inched higher to 7% in August as compared to a reading of 6.71% in July-a five-month low which is capping gains in the local currency to a certain extent. Looking ahead, we foresee some resistance for the rupee-dollar exchange rate at the 79 mark, while a breach of the same would pave the way for the 78.50 mark in the coming days.”

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

“Rupee rose following gains in domestic and global equities and also as against the dollar fell against its major crosses. Market participants remain cautious ahead of the important CPI number that was released yesterday. Data showed inflation in the US unexpectedly rose in August and underlying inflation accelerated amid rising costs for rents and healthcare, giving the Federal Reserve ammunition to deliver a third 75 basis points interest rate hike. In the 12 months through August, the CPI increased 8.3%. That was a deceleration from July’s 8.5% rise and a 9.1% jump in June, which was the biggest gain since November 1981.”

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“U.S. Treasury yields surged and a recession warning – the yield curve inversion – widened after the inflation data also bucked bond investor expectations. Dollar rose sharply post the release of inflation number and expectation of aggressive rate hike by the Fed could keep the greenback supported at lower levels. Today, focus will be on the CPI number that will be released from the UK. We expect the USDINR(Spot) to trade sideways and quote in the range of 79.20 and 79.80.”

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