The Indian rupee opened 15 paise higher at 81.77 per dollar on Wednesday against the previous close of 81.92 per dollar. The local unit is likely to appreciate amid weakness in the dollar and optimistic global market sentiments. Meanwhile, investors brace for US FOMC policy meeting and the Union Budget. USDINR is likely to break the key support level of 81.95 to start trading in a downward trend towards the level of 81.80,” said ICICIdirect. Rupee may remain under depreciation pressure on account of plateauing of exports and subsequent widening of the current account deficit, said the Economic Survey 2022-23 tabled in Parliament on Tuesday.
Volatility in Rupee to increase amid Budget, major central bank meetings
“USDINR spot closed 42 paise higher at 81.92, after making a high of 82.07. Strong demand for US Dollar from custodial banks, possibly FPI ouflows and some month end dollar demand pushed USDINR higher. Once it crossed, 81.80, dealer stops were hit and prices moved up quickly. But suspected central bank intervention cooled it a bit. Over the remainder of the week we expect volatility to increase as Union Budget and major central bank meetings are scheduled. We could see a range of 81.60 and 82.30 play out in USDINR,” said Anindya Banerjee, VP – Currency Derivatives & Interest Rate Derivatives at Kotak Securities Ltd.
Fiscal deficit target in Budget 2023 to influence rupee
Rupee fell sharply as the dollar rose against its major crosses ahead of Union Budget 2023, US FOMC policy statement. Expectation is that the central bank could continue to raise concern on higher inflation but, on the other hand could slower its pace of rate hikes. On the domestic front, Economic Survey 2023 said that India’s economic recovery from the pandemic is complete and the economy is expected to grow in the range of 6-6.8%. “Today, Union Budget market participants will be keenly watching the fiscal deficit target set by the government and that is likely to influence the move in the rupee. We expect the USDINR(Spot) to trade sideways and quote in the range of 81.40 and 82.10,” said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.
USDINR trend bullish; Budget 2023, US Fed meet, RBI MPC meet eyed
Indian Budget 2023-24, and the US FOMC Monetary Policy, and the RBI Monetary policy to impact Rupee movement in near-term. “Keeping all the factors in mind, technically, USDINR Spot is likely to remain bearish on a weekly basis. The pair could hit the $80 mark provided the upcoming events give out green signals to the markets. However, if there are any unexpected happenings in the Indian Budget, FOMC Policy, and RBI Policy, we could see the pair moving into bullish territory towards 83.00 levels by mid-Feb’23. Overall, the trend is bullish in USDINR spot for the month of Feb’23,” said Heena Naik, Research Analyst – Currency, Angel One Ltd