The Indian Rupee is likely to further depreciate to 82 to a dollar in the near term due to widening of trade deficit and expected aggressive rate hike by the US Fed later this week to tame record high inflation, according to economists. In the previous session, rupee snapped a 11-week losing streak to end higher, benefiting from Reserve Bank of India intervention after it fell through the 80-per-dollar mark. The local unit ended at 79.85, slightly stronger compared to its close of 79.94. “RBI has zero tolerance for volatile and bumpy movements in the rupee and will continue to engage with the foreign exchange market to ensure the rupee finds its appropriate level,” governor Shaktikanta Das said on Friday.

Raj Deepak Singh is an Analyst – F&O, Currency, and Commodities, ICICIdirect

We expect rupee to depreciate in this week till 80.50 amid strong dollar. Further, investors will remain vigilant ahead of US Federal Reserve monetary policy meeting, where central bank is likely to hike rate by 75bps. More focus will be on statement from Fed to get the hint on future monetary stance. Additionally, rupee may slip further on concerns over economic uncertainty. Investors fear that monetary tightening across major countries to tame stubbornly high inflation may lead economies into recession. USDINR (July) as long as it sustains above 79.30 it may slip further till 80.50 this week.

Anuj Choudhary – Research Analyst, Sharekhan by BNP Paribas

“Indian rupee remained flat on Friday. Surge in domestic markets, FII inflows and softening crude oil prices supported Rupee. However, positive Dollar capped sharp gains. Dollar gained today on improved safe haven appeal amid concerns over recession and disappointing PMI data from Europe. We expect Rupee to trade on a mixed to negative note on strong Dollar and concerns over inflation and rising twin deficits. Dollar is also expected to recover from lower levels ahead of FOMC meeting next week wherein, the Fed is expected to hike rates aggressively. However, softening of crude oil price and surge in domestic markets may support Rupee at lower levels. USDINR spot price is expected to trade in a range of Rs 79.20 to Rs 80.80 in next couple of sessions.”

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

“Rupee consolidated in a narrow range and rose marginally ahead of the important ECB policy meeting that was last week. The ECB raised its benchmark deposit rate by 50 basis points to zero percent, breaking its own guidance for a 25 basis point move as it joined global peers in jacking up borrowing costs. The central bank raised interest rates by more than expected as concerns about runaway inflation trumped worries about growth. Focus now shifts to the Fed meeting that is scheduled this week; expectation is that the central bank could raise rates by 75bps and maintain a hawkish stance.”

“Meanwhile, a slowdown in growth, and hopefully with it, inflation, was likely to force the Fed to cut back on the size of rate hikes at future meetings. Pound fell on Friday after Britain’s businesses grew at their slowest pace in 17 months in July. The preliminary services and manufacturing firms, fell to 52.8 – the lowest since February 2021 – from June’s 53.7. A weak number might reduce pressure on the Bank of England to deliver a bigger-than-usual interest rate hike next month. Today, volatility for the dollar might remain low as no major economic data is expected to be released from the US. We expect the USDINR(Spot) to trade with a positive bias and quote in the range of 79.70 and 80.40 today.”