Rupee likely to depreciate against dollar; USDINR pair may trade sideways in 82.30-83.05 range

The Indian rupee is expected to depreciate slightly against the US dollar on Tuesday. The domestic is currency is likely to open a little low at 82.81 and may trade in a range of 82.30 to 83.05 intraday. Traders may remain cautious ahead of manufacturing PMI and trade deficit data, which is expected to be released on Tuesday. In the previous session, rupee pared its initial gains and settled lower against the US dollar, tracking the strength of the American currency in the overseas market. At the interbank foreign exchange market, the local unit opened at 82.35 and settled at 82.78 against the American currency, registering a fall of 31 paise over its last close of 82.47.

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

“On the other hand, Euro was weighed down after data released that showed Eurozone inflation came in higher-than-expected at 10.7%, a fresh record high. Euro zone inflation surged more than expected in October fuelling expectations that the European Central Bank will press on with big interest rate hikes despite economic growth slowing. Today, focus will be on the ISM manufacturing PMI number from the US and a better-than-expected economic number could extend gains for the dollar. We expect the USDINR(Spot) to trade sideways with a positive bias and quote in the range of 82.30 and 83.05.”

Anuj Choudhary – Research Analyst at Sharekhan by BNP Paribas

“Indian Rupee depreciated by 0.1% on Monday amid strength in US Dollar. However, positive domestic equities and weak crude oil prices cushioned the downside. Domestic indices are up by ~1.10%. Inflows by foreign investors also supported Rupee at lower levels. US Dollar surged by 0.33% today on rising expectations of a 75 bps rate hike by US Federal Reserve. Expectations of a 75 bps rate hike rose after US’s core PCE price index surged by 0.5% in September 2022.”

“We expect Rupee to trade with a negative bias amid strong US Dollar amid increasing odds of an aggressive rate hike by the Fed on Wednesday. Some recovery in crude oil prices may also weigh on Rupee. However, risk in risk appetite in global markets may prevent sharp downside in Rupee. Traders may also remain cautious ahead of India’s manufacturing PMI and trade deficit data, which is expected to be released on Tuesday. We expect USDINR spot price to trade in the range of 81.80 and 83.30 in next couple of sessions.”

Amit Pabari, MD, CR Forex Advisors

“The rally in USDINR seen in the last hour which drove the pair from 82.45 to 82.78 levels was eye-popping. This sharp rise can be attributed to month-end buying by importers and defence payment-related outflows and the turnaround in peer currencies. Overall, the pair has been seen picking up bids at the intraday lows in the past couple of sessions, portraying the market’s rush toward the USD ahead of FOMC. Primarily, 82.00 to 81.80 remains a strong support for the USDINR pair, a break-down below the same can change the trend (Chances are 20-25%). On the flip side, 83.20 will remain a near-term resistance around which RBI intervention can be expected. With the bias-ness of the pair on the upside, but sentiments driving the markets, we suggest strictly adhering to the hedging policy.”

Anil Kumar Bhansali, Head of Treasury, Finrex Treasury Advisors

“The dollar index rose to 111.45 as a 75 bps rate hike by FED in tomorrow’s meeting was fully factored in by the market. The US 10-year Treasury yields were at 4.03% while Brent oil was at $ 93.41 per barrel with Saudi Arabia and UAE supporting the oil production cuts. Rupee fell yesterday on buying by oil companies and breaching of 82.50 levels where stop losses were placed. The opening today would be at 82.81 with a range of 82.50 to 83.00. The Yuan and IDR were weaker among Asian currencies thus will not allow much strength to rupee. Exporters may sell near to 83.00 levels keeping a close watch on RBI while importers may buy the dips if they get any to hedge their payables.”

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