Rupee may appreciate to 82.20 per dollar amid weakness in crude oil prices; USDINR to trade in this range

By Raj Deepak Singh

Rupee depreciated last week to a new all-time low and touched 82.85 level amid weaker-than-expected economic data from India. Higher food prices drove retail inflation to a five-month high of 7.4 per cent while factory output fell for the first time in 18 months.  The dollar index traded flat after touching 113.92 last week despite rise in the US core consumer price index, which increased 6.6% from a year ago, the highest level since 1982, suggesting the Federal Reserve will likely stick to its aggressive tightening policy for now. 

Rupee is expected to trade with a negative bias this week amid depleting foreign exchange reserves. Further, rupee will be pressurised by FII outflow from the domestic equity markets. Moreover, Investors will keep an eye on building permits and industrial production data from the US. As long as USDINR sustains above 82.30 it may rally till 82.90.USDINR traded in upward resistance and support wedges to continue its upward trend towards the level of 82.70. The pair is expected to continue trading in upward trend towards the level of 82.90 after breaking the key resistance level of 82.70 in this week.

For Monday, Rupee may appreciate towards the 82.20 level amid weakness in crude oil prices. Further, rupee may be supported by strength in domestic equity markets. Additionally, investors will remain watchful ahead of NY empire state manufacturing index. USDINR (Sep) is likely to break 82.30 level to trade towards the level of 82.20.

(Raj Deepak Singh is an Analyst – F&O, Currency, and Commodities at ICICIdirect. The views expressed are the author’s own. Please consult your financial advisor before investing)