Rupee on Thursday plummeted over 100 paise against the US dollar as riskier assets took a hit after Russia launched military operations against Ukraine. Sustained foreign fund outflows, heavy selling in domestic equities and elevated crude oil prices also weighed on investor sentiment. At the interbank foreign exchange market, the local unit opened at 75.02 against the greenback and later dropped to a low of 75.75 before settling at 75.63, down 102 paise from the previous close. The domestic currency is expected to depreciate on Friday due to elevated crude oil prices, continuous FII fund outflows from Indian equity markets.
Rupee to depreciate due to rising crude oil prices, higher FII fund outflows: ICICI Direct
“The dollar index surged 0.98% on Thursday after Russia launched an invasion of Ukraine, as investors moved towards safe haven assets. Further, better-than-expected GDP and initial jobless claims data from the US lifted the dollar. However, sharp gains were capped on a decline in US treasury yields. Rupee February futures depreciated by 1.49% amid stronger dollar and pessimistic sentiments in domestic markets. The rupee is expected to depreciate today due to rising crude oil prices and higher FII fund outflows from domestic markets. Further, risk aversion in global markets and expectations of better personal spending data from the US may continue to support the dollar. US$INR (March) is likely to rise further towards 76.50 for the day.”
Heena Naik, Research Analyst – Currency, Angel One Ltd
“The USDINR Spot on Thursday made a gap up opening at 75.16 levels from its previous close of 75.55. The reason behind the sharp rise was mainly due to the ongoing Russia-Ukraine crisis. In a national address, Russian President Vladimir Putin authorized a special military operation in Donbas. As Putin spoke, big explosions were heard in Kyiv, Kharkiv, and other areas of Ukraine.”
“On the global front, the US President tweeted that Russia alone was responsible for the death and destruction this attack would bring and the United States, its allies, and partners will respond in a united and decisive way. The above update has already caused havoc in global equities and currencies. In the upcoming session, both Indian equities and the local unit are likely to remain in the bearish state. Investors would refrain from making any risky bets unless the global geopolitical situation is clear. For now, the USDINR Spot is likely to move towards 75.30 levels; a break of the same could push the currency towards 75.50 and higher levels in the near term.”
Sugandha Sachdeva, Vice President – Commodity and Currency Research, Religare Broking Ltd
“The Indian rupee has rolled on the steep downhill path and reeling under pressure in tandem with other emerging market currencies amid the crisis unfolding in Ukraine. Risk sentiments have soured as a comprehensive military assault by Russia is underway in Ukraine. This has led to steep gains in the safe-haven greenback and crude oil prices owing to supply worries while dragging down the domestic equities. Looking ahead, the Indian rupee is likely to trade with a depreciation bias as geo-political tensions aggravate, where it can test levels of close to the 76.10 mark.”
Gaurang Somaiya , Forex & Bullion Analyst, Motilal Oswal Financial Services
“Dollar against its major crosses rose to the highest level in two years on back of safe haven buying in the currency. The greenback has been subdued recently as tensions in Ukraine have increased and fueled speculation the U.S. Federal Reserve may be less aggressive in tightening policy at its March meeting. US President announced fresh round of sanctions on Russian banks and state-owned enterprises. Biden said the sanctions were designed to have a long-term impact on Russia and to minimize the impact on the United States and its allies. And he said Washington was prepared to do more.
“On the economic data front, preliminary GDP number released from the US showed the economy increased at a 7% annualized rate last quarter, the government said in its second GDP estimate. That was slightly up from the previously reported 6.9% pace. The economy grew at a 2.3% pace in the third quarter. Today, from the US, durable goods and core PCE index number will be released and is likely to provide cues in the latter half of the session today. We expect the USDINR(Spot) to trade sideways with a positive bias and quote in the range of 75.20 and 76.00.”