The rupee plunged by 22 paise against the US on Monday registering the fifth consecutive session of loss, during which it has lost 68 paise. The local unit declined as geopolitical tensions pushed investors towards safe-haven assets, and a lacklustre trend in domestic equities, elevated crude oil prices weighed on sentiments. At the interbank foreign exchange, the rupee opened at 75.53 against the greenback, and later witnessed an intra-day high of 75.37 and a low of 75.64 before ending the day at 75.58, down 22 paise from the previous close. The rupee is expected to depreciate further, due to rising oil prices. Further, pessimistic sentiments in the global markets and stronger dollar may continue to put pressure on the rupee. Investors will now keep an eye on series of macro economic data from US. US$INR (Feb) is expected to rise further towards 76.0 levels, said ICIC Direct.

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

“Rupee remained under pressure against the US dollar on uncertainty that Russia is preparing to invade Ukraine. According to the United States, Russia could make such a move at any time and might create a surprise pretext for an attack which reaffirmed a pledge to defend “every inch” of NATO territory. On the domestic front, market participants remained cautious also ahead of inflation number that was released yesterday. Data showed CPI rose 6.01% in January as compared to 5.56% in the previous month. The uptick in the food basket was due to a sharp rise in prices of oils and fats which climbed 18.70% on year in January.”

“On the other hand, dollar rose to the two-week high on growing worries about Russia-Ukraine tensions and as St. Louis Federal Reserve President James Bullard reiterated calls for faster U.S. Federal Reserve interest rate hikes. Bullard also said four strong inflation reports in a row warranted action and that the central bank needed to “ratify” market expectations of its upcoming moves. Today, focus will be on the PPI number and an uptick in number could extend gains for the dollar. We expect the dollar to trade with a positive bias and quote in the range of 75.20 and 75.80.”

Heena Naik- Research Analyst – Currency, Angel One Ltd

“On 14 February 2022, USDINR made a gap up opening at 75.53 levels from its previous closing of 75.38 levels. Thereafter it touched the higher levels of 75.64 and finally closed the trading session at 75.60 levels. This bullish trend is likely to continue in tomorrow’s trading session as well. There is a high possibility that USDINR may touch the upper levels of 75.80; a break of the same could push the currency towards 76.00 levels. Apparently, the geopolitical crisis between Russia and Ukraine has taken the entire global market under its scanner. Moreover, higher crude prices are another headache that Indian markets are facing. Outflows are likely to continue for some more time giving less fodder to Rupee revive again. As of now, the trend of Rupee is weak.”

Amit Pabari, MD, CR Forex Advisors

“After a roller coaster ride in yesterday’s session, USDINR pair is expected to open near 75.55 today and it is likely to trade in the range of 75.35 to 75.85 with an upside bias. The US dollar index was seen testing a 15-day high above the 96.40 mark after both risk-on (Fed’s hawkish tilt) and risk-off sentiment (Russia-Ukraine tension) lifted the momentum higher. The verdict on the special meeting is yet to come but the market is expecting an immediate end of bond buying. In the odd case, if they go for an emergency rate hike, then it would be the first inter-meeting rate hike since 1994.”

“On another side, Russia-Ukraine tensions were seen easing yesterday after the Ukrainian ambassador commented that Ukraine may give up its bid to join NATO to avoid war. However, the US has again urged its citizens to leave Ukraine. Overall, the sentiment is setting a weaker momentum for the EM FX and so for the Rupee. Domestically, equity markets were seen tumbling by more than 3% amid rising tensions. This led to an FII’s heavy withdrawal of more than Rs. 4200 crore, taking the total to more than Rs. 15,000 for the month. On the economic data front, India’s CPI came around 6.01%- the highest in seven months and moving just outside of the RBI’s comfort range. It would be watchful how RBI utilizes their forwards and heavy FX reserve kitty in case of a sudden depreciation. But overall, depreciation toward 76.30 is imminent over the short term. On the contrary side, 75.20 -75.00 will act as a key reversal level.”

There is an upward drift in USDINR: Kotak Securities

“Crude oil price continues to march higher and FPI continues to exit their holdings in Indian stocks and bonds. FPI has sold nearly $5.8 billion YTD and nearly $12 billion since September end of last year. However, this relentless selling has been matched by FDI inflows and ECB inflows. Carry traders have not shown any signs of panic even though oil prices are near $100 mark, a 7 year high. Strong commercial flows and favourable real yields are what keep them in Rupee. As a result, though there is an upward drift in USDINR, the pace is excruciatingly slow. The question is, if tensions ease and oil prices reverse, then USDINR can reverse with a faster speed. As of now, bias remains upward as long as prices sustain above 75.20 on spot. Focus on bullish strategies with a closing stop below 75.20 as a spot reference.”