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Rupee trades flat on strong dollar, elevated crude prices; USDINR to remain sideways in this range

The rupee opened nearly flat on Wednesday against a rampant US dollar driven by increased flight-to-safety bets, but investors eyed the Reserve Bank of India (RBI) to intervene and stem any significant losses.

Rupee trades flat on strong dollar, elevated crude prices; USDINR to remain sideways in this range
USDINR(Spot) to trade with a positive bias and quote in the range of 82.10 and 82.80

The rupee opened nearly flat on Wednesday against a rampant US dollar driven by increased flight-to-safety bets, but investors eyed the Reserve Bank of India (RBI) to intervene and stem any significant losses in the domestic currency. The local unit is predicted to trade in a narrow range even as the dollar stands tall in currency markets. In the previous session, rupee consolidated in a narrow range and settled 5 paise higher against the US dollar. At the interbank forex market, the local unit had opened at 82.35 against the greenback, and it finally ended at 82.35, up 5 paise from its previous close.

Anindya Banerjee, VP, Currency Derivatives & Interest Rate Derivatives, Kotak Securities

“USDINR spot closed flat at 82.31, after suspected RBI intervention capped its advance. Over this week, important data points are: FOMC minutes and US CPI inflation. A strong than expected core inflation can push USDINR towards 82.80 levels. Over the near term, we expect a range of 81.80 and 82.80 on spot.”

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

“Rupee rose marginally in yesterday’s session as the dollar retraced from higher levels and global crude from the recent highs. Oil prices settled 2% lower, extending the previous session’s almost 2% decline, as recession fears and a flare-up in COVID-19 cases in China raised concerns over global demand. Oil also came under pressure from a strong dollar, which hit multi-year highs on worries about interest rate increases and escalation of the Ukraine war.”

“The dollar rose yesterday in the overnight session after one of the Fed member said that even with a large amount of rate rises this year, the central bank has yet to get surging inflation under control and will need to press forward with tightening monetary policy. Today, focus will be on the FOMC meeting minutes and hawkish comments is likely to strengthen the greenback. On the domestic front, inflation number will be released; expectation is that inflation could hit five month high in Sept on food prices. We expect the USDINR(Spot) to trade with a positive bias and quote in the range of 82.10 and 82.80.”

Amit Pabari, MD, CR Forex Advisors

“The central banks today with their intervention, are able to calm the nerves for a brief period with a quick fix but the long-term damage remains inevitable. And the same bids for RBI who tried to limit the damage in Rupee but couldn’t help reverse the same despite spending heavily from reserves. With the liquidity slipping into deficit again on high credit growth ahead of festival demand, it will be a tough call for RBI to limit the losses in the rupee via spending reserves. The near-term bottom for the pair lies around 82.00 levels and with the RBI’s absence, the pair could move again above 82.50 and 83.00 levels in the next few sessions.”

Anil Kumar Bhansali, Head of Treasury, Finrex Treasury Advisors

“As DXY rises to 113.57, USDINR to open around 82.30 with RBI protecting rupee at higher levels. Yesterday, RBI was present at 82.42 and did not allow rupee to go beyond this levels despite persistent. Market is now anxiously waiting for US CPI data on Thursday which could pave way for further rate hikes in US by FED. India CPI and IIP data are also expected. Oil prices fell on lowering China demand as covid continues to plague the second largest economy in the world. Exporters can continue to wait with a stop loss of 82.00 as rupee may not rise much despite RBIs insistance in selling dollars. RBI sold dollars and parked them forward thus receiving premiums keeping premiums also lower. Importers can continue to buy the dips to cover their near-term imports.”

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First published on: 12-10-2022 at 09:29:00 am