Rupee likely to depreciate further to 84 in near term amid strength in US dollar, risk aversion in markets

The Indian Rupee is expected to open flat and trade lower against the US dollar amid risk aversion in equity markets, weak Asian peers, and strength in the greenback. Rupee may weaken further, and fall to 84 in near-term according to analysts. USDINR (Spot) is expected to trade with a positive bias on Thursday, and quote in the range of 82.50 and 83.20. In a sudden and sharp move, the rupee in previous session lost 0.8%, plunging below the 83 mark against the dollar to close the session at a historic low of 83.02. The fall of 66 paise in a single day is the steepest in recent times. The Indian currency has now lost 2% this month and close to 12% against the American dollar in 2022.

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“Rupee thumbed drastically against the US dollar and closed to lifetime low above 83 on Wednesday as US bond yields raised by 1.5% on Wednesday resulting in most of the Asian currencies getting weaker and making a record low against the dollar. The offshore Chinese yuan weakened past 7.23 per dollar, sliding back toward record lows. We expect rupee might show some more weakness in the coming days. We might see 84 level very soon.”

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

“Rupee fell to fresh almost time lows yesterday in the second half of the session. The dollar rebounded from two-week lows as benchmark 10-year Treasury yields rose to 14-year highs. Treasury yields resumed their march higher as investors continue to maintain expectations that the US Fed will continue to aggressively raise interest rates to bring down soaring inflation. Adding to gains for the dollar was one of the Fed members’ comments that Treasury yields resumed their march higher as investors maintained expectations that the central bank would continue to aggressively raise interest rates to bring down soaring inflation.”

“On the other hand, pound fell sharply after inflation inched up to 10.1% in September, rising more than expected and returning to a 40-year high hit in July. Today, focus will be on economic number that will be released from China and also from Philly Fed manufacturing index number that will be released from the US. We expect the USDINR(Spot) to trade with a positive bias and quote in the range of 82.50 and 83.20.”

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

“USDINR spot closed at an all-time high at 83.02 and also at the highest point of the day. Flurry of buy orders from interbank dealers and speculators due to massive short covering pushed the market higher. It seems central bank was not that visibly active and that caused prices to rise sharply. Global cues were USD positive as risk off sentiments, strong dollar index, weak Asian currencies and surging US bond yields, all coupled to push USDINR higher. Over the near term, we expect USDINR to trade with a positive bias, within a range of 82.70 and 83.50 levels.”

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