Rupee may depreciate on strong dollar, elevated crude prices; USDINR pair likely to trade with positive bias

Rupee may depreciate on strong dollar, elevated crude prices; USDINR pair likely to trade with positive bias

The Indian rupee is likely to depreciate amid strong dollar, elevated crude prices, uncertainty in equity markets and volatile FII inflows. USDINR is expected to trade within a range of 79.50 and 80.10 on spot in the coming sessions. In the previous session, rupee weakened slightly as the US dollar soared to a new two-decade high on escalating European energy crisis. RBI aims to anchor expectations around the depreciating rupee and will intervene to prevent an overshoot, ensuring the exchange rate reflects fundamentals, said governor Shaktikanta Das on Monday. The local currency has so far depreciated more than 7% against the U.S. dollar, but Das said the depreciation was less than in other currencies.

Dilip Parmar, Research Analyst, HDFC Securities

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Anuj Choudhary – Research Analyst, Sharekhan by BNP Paribas

“Indian rupee appreciated slightly by 0.05% on Monday amid positive domestic equities. Upbeat macroeconomic data from India also supported Rupee. India’s composite PMI and services PMI rose to 58.2 and 57.3 in August from 56.6 and 55.5 in July respectively. However, surge in crude oil prices and higher US Dollar capped sharp gains. Dollar rose to a fresh 20 year high today and briefly breached the 110 mark. We expect Rupee to remain weak on surge in US Dollar on concerns over global economic slowdown. Surge in crude oil prices may also weigh on Yen. However, positive tone in domestic equities may support Rupee at lower levels. US markets will remain closed today on Labor Day holiday. USDINR spot price is expected to trade in a range of Rs 79 to Rs 80.50 in next couple of sessions.”

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

“USDINR spot closed 4 paise higher at 79.84, on a day of lackluster trading. With US markets shut for holidays, volumes were thin. Strong US DOllar Index kept the USDINR supported but FPI flows capped any advance beyond 79.990 levels on spot. Over the near term bias remains upward but within a range between 79.50 and 80.10 on spot.”

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

“Rupee traded in a narrow range and volatility was low as most market participants were on the sidelines following US market holiday. In the last few sessions as investors were cautious ahead of the non-farm payrolls number that was released from the US. On the domestic front, data showed FIIs continued to remain net buyers and that supported the rupee. On Friday, data showed the pace of U.S. hiring rose more than expected in August, but wage growth moderated and unemployment ticked higher.”

“Yesterday, the dollar rose to a fresh 20-year high against its major crosses and it was follow-up buying seen after Friday’s payroll data. Asian markets were supported after services PMI number from China came in better-than-estimate. On the other hand euro plunged following across the board dollar and weak services PMI number from the Euro zone. Today, focus will be on the services PMI number that will be released from the US and better-than-expected data could extend gains for the greenback. We expect the USDINR(Spot) to trade with sideways and quote in the range of 79.40 and 79.80.”

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Anil Kumar Bhansali, Head of Treasury, Finrex Treasury Advisors

Rupee to open at 79.80 as dollar index eases slightly down from 110 levels to 109.50 as euro and GBP move up after a big fall due to Russian Gas issues. The services PMI for India came higher at 57 against 55 last month. US dollar was well bid as the rupee fell to 79.90 before recovering to 79.85 levels. Today, the range is expected to be between 79.50 to 80.00. Exporters may continue selling near 79.90 and importers may buy the dips.

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