The Indian rupee opened at 80.94 per dollar on Monday, up 18 paise from the previous close of 81.12 per dollar. The local unit is below the 81 mark for the first time since 1 December 2022. Rupee is expected to appreciate against the greenback on the back of rising risk appetite in the domestic market, weakness in the dollar, and decline in crude oil prices. Dollar may remain volatile as the weaker set of economic numbers and moderating inflation in the US could force the Fed to dial back its aggressive rate hike policy. “US$INR has breached the 100-day EMA support at 81.48 and is expected to weaken towards the next support at 80.80, followed by 80.60,” said ICICIdirect.
Rupee to take cues from flow story, movement in USD
In a truncated week with the holiday on 26 January on account of the Republic Day of India, and a Lunar holiday in China, the Indian Rupee is expected to take cues from the flow story and movement in the US dollar. “If not FII, then FDI inflows are supporting the appreciating bias. However, RBI could jump into the market through PSUs to curb the excess gain or volatility. The recently released data suggests that, for the week ended 13 January when Rupee had sharply appreciated from 82.90 to 81.50, RBI’s FX Reserve kitty jumped by $10.417 bln to $572 bln, the biggest rise on weekly basis in recent times. The focus will be on India’s first-ever sovereign green bond issue,” said Amit Pabari, MD, CR Forex Advisors.
“The RBI will auction Rs 40 billion each of 5 and 10-year green bonds on Wednesday. Overall, the appreciation could continue towards 80.80 to 80.50, but RBI’s stance at that time will be watchful. On the higher side, 81.50 to 81.80 will act as a strong resistance. The US dollar index is standing near its 7-month low as weaker US economic data and a falling expectation of lesser rate hike beyond the Fed weighs on the USD. This week, the focus will be on tomorrow’s flash PMIs, Thursday’s US advance GDP, and Friday’s PCE data,” Pabari added.
USDINR (Spot) likely to trade sideways
“Rupee consolidated in a narrow range after witnessing volatility in the last few sessions. Earlier in the week, volatility was seen as economic numbers from the US came in below estimates and after Bank of Japan held to its stance. Last week, volatility remained elevated after Weekly Jobless claims unexpectedly fell to 190,000 last week, lower than the expected 214,000, adding to worries that the still tight labor market could convince the Fed to continue its aggressive rate hikes. We expect the USDINR(Spot) to trade sideways and quote in the range of 80.80 and 81.40,” said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.
USDINR may head towards 80.4
“Last week, we had marked 81.4-81.50 as a pullback region from where another leg downaiming 80.9, would unfold. This is the move we will aim at fulfilling today, with preparedness to see 80.4 as well. Alternatively, pull back above 80.12 could usher in short covering,” Anand James – Chief Market Strategist at Geojit Financial Services.