The Indian rupee is likely to depreciate on Friday amid strong US dollar and risk aversion in global markets. Weak market sentiments amid aggressive monetary tightening by central banks will also weigh on the currency. The USDINR pair is expected to trade sideways to down. Softening crude oil prices may lend some support to the domestic unit. Rising for the fourth straight session, the rupee appreciated against the US dollar in previous session after the US Federal Reserve hiked rates by 50 basis points on expected lines but played down prospects of a more aggressive rate action at its next meeting. At the interbank forex market, the domestic unit opened at 76.17 against the greenback. It moved in a range of 75.99 to 76.30 during the session, before finally settling at 76.35, up 5 paise from its previous close.
Rupee likely to depreciate on strong US dollar: ICICI Direct
“Rupee future maturing on May 27 appreciated by 0.13% amid retreat in US dollar and LIC IPO related inflows. However, sharp gains were prevented on surge in crude oil prices. Rupee is expected to depreciate today amid strong dollar and risk aversion in the global markets. Market sentiments were hurt as investors fear that aggressive monetary tightening by central banks, supply chain disruption and soaring energy prices will hurt economic growth. Moreover, investors will remain vigilant ahead of job data from US. US$INR (May) is expected to trade in a range of 76.40-76.90.
Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services
“Rupee rose in the first half of the sessions yesterday after the Federal Reserve was less hawkish than expected. The dollar fell against its major crosses after the announcement as the size of balance sheet trimming was less than market estimates. The greenback was weighed down also as the Fed Chairman mentioned that the US central bank is not considering 75bps rate hike, but added that additional 50 basis point jumps should be on the table for the next couple of meetings. On the domestic front, a surprise rate hike and hawkish statement also supported the currency. But yesterday, the major trigger came in from the Bank of England wherein it decided to raise rates by another 25bps to 1%. Today focus will be shifting to non-farm payrolls number that will be released from the US and that is likely to trigger further volatility for the dollar. We expect the USDINR(Spot) to trade sideways and quote in the range of 76.20 and 76.80.”
Anindya Banerjee, VP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities
“USDINR spot closed 16 paise lower at 76.25, due to positive sentiments in global equity markets, interest rate hike from RBI and profit booking post US Fed. However, the drop has been shallow due to an uptick in oil prices. Over the near term, the outlook for USDINR remains mixed and hence we expect a broad range of 75.80 and 76.45 on spot.”
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