Rupee opens flat, may depreciate on FII outflow, elevated crude prices; USDINR to trade in this range | The Financial Express

Rupee opens flat, may depreciate on FII outflow, elevated crude prices; USDINR to trade in this range

Rupee opens flat. Hopes of the RBI’s dovish stance have weighed on the Rupee. However, 83.00 will act as strong resistance as RBI’s second tranche of green bond issues could bring some inflows.

RupeeVsDollar, DollarVsRupee, currency, US dollar
Rupee likely to depreciate. USDINR unlikely to break 83.00-83.25 levels given by possible RBI intervention. Rather, it seems like the rupee would move towards 82.50 first, followed by 82.00 levels in coming days.

Rupee opened marginally higher at 82.69 per dollar on Wednesday against the previous close of 82.70 per dollar. The local unit is expected to depreciate today amid persistent FII outflow and surge in crude oil prices. Meanwhile, investors will closely watch RBI’s monetary policy, where the central bank is expected to hike interest rate by 25 bps to 6.50%. “The US$INR is likely to surpass the hurdle of 82.85 to continue trading towards the level of 83.00,” said ICICIdirect.

Rupee to trade in 82.40 – 83.10 range

In the previous session, rupee recovered after Monday’s sharp sell-off amid long unwinding ahead of the RBI monetary policy decision. The stable dollar index and recovery in domestic equities also supported the rupee in today’s trade. However, the bias for the rupee remains bearish following foreign fund (FII) outflows and weak technical chart set-up. We believe the central bank may try to protect the level of 83 but the direction could be difficult to change. “In the near term, spot USDINR has support at 82.10 and resistance at 83.10,” said Dilip Parmar, Research Analyst, HDFC Securities.

“USDINR spot closed 3 paise lower at 82.70 on spot on Tuesday, in a day of listless trading. Volumes were low as traders awaited the US central bank chief’s speech tonight as well as the RBI meeting tomorrow. USDINR faces stiff resistance near 83.00/83.25 zone on spot and support near 82.40/50. We expect a range of 82.40 to 83.10 on spot,” said Anindya Banerjee, VP – Currency Derivatives & Interest Rate Derivatives at Kotak Securities Ltd.

USDINR to trade sideways

“Rupee consolidated in a narrow range and volatility remained low ahead of the important RBI policy meeting scheduled today. The central bank is expected to raise rats by 25bps but importantly market participants will be awaiting for cues on inflation and growth going ahead. While headline CPI has eased, core inflation remains sticky. Most investors expect that the stance could continue to be a withdrawal of accommodation, even as liquidity is close to neutral,” said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.

“On the other hand, dollar traded with high volatility after the Federal Reserve Chairman said that disinflation “has begun” but is going to take time. He added that if the data shows that inflation is running hotter than the Fed expects, that will mean higher rates. A couple of Fed members are also expected to speak today and that could trigger further volatility for th greenback. We expect the USDINR(Spot) to trade sideways and quote in the range of 82.40 and 82.90,” Somaiya added.

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First published on: 08-02-2023 at 09:42 IST