Rupee likely to appreciate against dollar amid strong cues; USDINR may trade sideways in this range

The Indian rupee is expected to appreciate against the US dollar on Thursday amid volatility in equity markets, strengthening Asian peers, stable crude prices, and retreat in the American currency. The USDINR pair is expected to find support near 81.80 to 82.00 levels and rebound towards 82.50 to 82.80 over the short term, according to forex analysts. In the previous session, rupee appreciated 26 paise against the US dollar, tracking a positive trend in domestic equities. At the interbank foreign exchange, the domestic unit opened at 82.71 against the greenback, then gained some ground to close at 82.62, up 26 paise from its previous close.

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“Rupee consolidated in a narrow range but overall weakness prevailed as the dollar continued with its upward journey. But just in a session the dollar retraced and fell sharply against its major crosses following weak economic data from the US. Weakening economic data firmed views that the Federal Reserve will slow the pace of its rate hiking cycle, sending the euro back above parity with the greenback for the first time in a month.”

“On the other hand, pound extended its gains on optimism that Rishi Sunak and his team will restore stability and credibility in the UK. Today, focus will be on the ECB policy statement and expectation is that the central bank could be hawkish and extend gains for the currency. Apart from ECB, advance GDP number from the US will also be important to gauge a view for the dollar. We expect the USDINR(Spot) to trade sideways with a negative bias and quote in the range of 81.80 and 82.40.

Anil Kumar Bhansali, Head of Treasury, Finrex Treasury Advisors

“Indian rupee to open at 82.05 after the dollar index fell to below 110 levels and US 10 year fell to 4.00%. The probable reason for this fall is slower rate hikes from US in November-22 despite inflation being higher. The rise in oil prices from $90 per barrel to $94 per barrel would cap the rise in rupee as Oil is a major import for the country. Oil companies and importers will use this opportunity to buy dollars at a cheaper rate. The range for the day is expected to be 81.80 to 82.40 as most Asian currencies have also risen from their recent lows. Exporters may now sell on rise after the stop loss of 82.50 is breached while importers can buy dollars near to 82 levels to hedge their payables.”

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

“The dollar rupee pair after testing the high 83.32 on the futures front has been broadly sideways. At the moment the movement of the major currencies has closely related to the movement in the dollar. Rupee is trading at a critical level in NDF. In the last one month, it has bounced twice from 82.00 levels on spot. Market will definitely try to push USDINR lower riding on risk-on sentiment. Given that rally in INR is also going to be supported by broader dollar weakness globally, only a strong bid from RBI can prevent USDINR not from sliding lower. But today being monthly expiry day, the move may be seen post expiry.”

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Amit Pabari, MD, CR Forex Avisors

“From FIIs investment to crude oil prices to Fed’s tone on interest rates to interest rate differential, all are playing well with the Rupee. The RBI has taken a timely call to curb the volatility and rates but allowed Rupee to trade on a free float basis in line with other peer currencies. The recent recovery in the Rupee’s fall could attract importers to rush and cover short-term payables and achieve their Risk Management Policy(RMP) and at the same time exporters could wait for the resumption of depreciating move. Overall, we expect the pair to find support near 81.80 to 82.00 levels and rebound towards 82.50 to 82.80 over the short term.”

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