Rupee opens higher, may appreciate to 81.30; volatility likely ahead of RBI MPC meeting

Rupee opens higher against US dollar. This week, on the domestic front, focus will be on the RBI policy statement and is likely to trigger volatility.

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Rupee Vs Dollar: USDINR(Spot) to trade sideways and quote in the range of 81.80 and 82.40

Rupee opened nearly 60 paise lower at 82.41 per dollar on Monday amid rise in the value of greenback against a basket of six peers and global crude oil benchmarks. At the interbank foreign exchange, the domestic unit opened weak at 82.35 against the dollar, then fell to 82.50, registering a decline of 42 paise over its last close. In the previous session, rupee settled at 82.08 against the US dollar. The dollar index was trading 0.2% higher at 102.9. Rupee is expected to appreciate amid rise in risk appetite in equity markets. Meanwhile, sharp upside may be prevented on strong dollar and persistent FII outflows. Additionally, investors will now closely watch RBI’s monetary policy scheduled on February 8, where the central bank may hike rates by 25 bps.

“The US$INR is likely to break the key support level of 81.85 to continue trading towards the level of 81.75,” said ICICIdirect. FDI inflows and RBI stance could be the supportive point for Rupee. Whereas, FPIs and stronger USD could pressurize the same. The RBI policy could turn out to be a tiebreaker. Overall, we are expecting that the pair should face a strong resistance near 82.40-50 levels, and further RBI could also intervene around those levels; which could make a reversal towards 81.50-81.30 levels again, said Amit Pabari, MD, CR Forex Advisors.

Rupee fell on Friday but gained in the latter half of the session ahead of the important non-farm payrolls number that was relased from the US. Data showed the economy added 517,000 for January as compared to the previous month’s number of 260,000 which was revised higher. On the other hand, unemployment rate fell to 3.4% as compared yo 3.6% in the previous month. US treasury yields rose after jobs data came in much better than expected. “This week, on the domestic front, focus will be on the RBI policy statement and is likely to trigger volatility at the end of the week. We expect the USDINR(Spot) to trade sideways and quote in the range of 81.80 and 82.40,” said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.

The rupee started this Monday on a weaker note against the dollar after a better-than-expected US jobs report prompted investors to bet on more Federal Reserve rate increases, said Sriram Iyer, Senior Research Analyst at Reliance Securities. Supports for the USD/INR spot pair are at 81.9100 and 81.6000, and resistances are at 82.5000 and 82.7500 and the pair could remain within the levels this Monday, Iyer added. In the domestic equity market, the 30-share BSE Sensex was trading 242.95 points or 0.40% lower at 60,598.93. The broader NSE Nifty 50 declined 100.20 points or 0.56% to 17,753.85.

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First published on: 06-02-2023 at 10:52 IST