Rupee opens higher amid firm global cues; decline in crude prices; USDINR pair to trade in this range

Rupee opens higher amid firm global cues; decline in crude prices; USDINR pair to trade in this range

The Indian Rupee opened 15 paise higher at 81.70 per dollar on Thursday. The domestic currency is expected to appreciate against the greenback amid rising risk in equity markets, firm global cues. USDINR pair is expected to trade sideways with a negative bias. In the previous session, rupee depreciated against the US dollar on dollar demand from importers and recovery in crude oil prices. Sustained foreign fund outflows and concerns over rising COVID-19 cases in China also weighed on investor sentiments. At the interbank foreign exchange market, the local unit opened at 81.81 and settled at 81.85 against the American currency, registering a fall of 18 paise over its last close.

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“Indian Rupee traded in depreciated by 0.19% on Dollar demand from importers and recovery in crude oil prices. FII outflows also weighed on Rupee. However, soft US Dollar and positive domestic markets cushioned the downside. We expect Rupee to trade with a negative bias on concerns over rising COVID-19 cases in China and hawkish Fed speak. Though some Fed officials hint that they are open to slower pace of rate hike, the US central bank will not pause its rate hike. Traders may take cues from manufacturing and services PMI, durable goods orders and new home sales data. Traders may also remain cautious ahead of FOMC meeting minutes later today. USDINR spot price is expected to trade in a range of Rs 81.20 to Rs 82.50.”

Amit Pabari, MD, CR Forex Advisors

A fall in US DXY back to last week’s low could spark a rally in INR. Further, 81.80-82.20 attracted exporters to lock in a better spot for their forward bookings. The RBI on other hand could remain silent and let the currency move based on market forces. On the other side, China’s daily Covid cases have hit a record high since the beginning of the pandemic. Amid expectations of sluggish demand from China and lower productivity/business activity, the Brent crude oil prices corrected by 4% and now trading near $85 levels. This could further support Rupee as oil import bills could be reduced and thus helps a trade balance. Technically, the USDINR pair is finding resistance near 81.80 to 82.20, which was acting as support earlier. So, from here, we could expect the pair to resume its downtrend towards 81.30 to 81.00 levels in the near term and further towards 80.50 over the medium term.

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

“Rupee in the last hour of the session came under pressure as the dollar rose ahead of the FOMC meeting minutes that was released yesterday.  According to the minutes, Federal Reserve officials expect to switch to smaller interest rate increases “soon” and also expressed concern over the impact rate increases could have on financial stability and the economy. However, some committee members expressed concern about risks to the financial system should the Fed continue to press forward at the same aggressive pace. Major crosses rose in yesterday’s session following less hawkish Fed outlook. Today volatility for the dollar could remain low as US markets remain shut on account of Thanksgiving day holiday. We expect the USDINR(Spot) to trade sideways and quote in the range of 81.20 and 81.80.”

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