Rupee likely to remain steady ahead of US Fed meet outcome; USDINR pair to trade sideways in this range

Rupee likely to remain steady ahead of US Fed meet outcome; USDINR pair to trade sideways in this range

The Indian rupee is expected to open flat and trade range-bound on Wednesday ahead of the US Fed meeting. USDINR pair is expected to trade in 82.45-82.83 range during the day. In the previous session, rupee appreciated against the US dollar as the greenback retreated from its elevated levels. At the interbank foreign exchange market, the local currency opened at 82.74 and settled at 82.71 against the American currency, registering a rise of 10 paise over its previous close. Rupee is expected to recoup only some of its recent losses against the dollar over the coming year as the interest rate gap is set to widen further alongside a worsening current account deficit, reported Reuters citing its poll of FX strategists.

Sriram Iyer, Senior Research Analyst at Reliance Securities

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

“The market sentiment tilted more towards the risky assets seems to have helped the USDINR protect the 83.00-83.05 handle on the upside. We can expect the pair to consolidate between 82.30 and 83.05 ahead of the FED Policy.”

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

“Rupee traded in a narrow range as market participants remain cautious ahead of the three major central bank policy statements that will be released in the next couple of sessions. Importantly focus will be on the Fed that is expected to raise rates by another 75bps. Reaction of the currency will be more to do with the central banks stance going ahead. Retracement in the dollar in the last few sessions is because investors have cheered from speeches and interviews by some Fed officials that have suggested the central bank could do smaller hikes.”

“The BoE is also meeting this week and expected to deliver a 75-bps increase as well. Traders then expect the BoE to slow down and raise rates by 50 bps in December. On the domestic front, Reserve Bank of India’s monetary policy committee (MPC) will meet a day after the Federal Reserve meeting, outside its scheduled meetings, to discuss its first ever inflation target miss, which will require it to write a letter to the government. Today, focus will be on the FOMC policy statement and the private payrolls number from the US. We expect the USDINR(Spot) to trade sideways and quote in the range of 82.30 and 83.05.”

Anil Kumar Bhansali, Head of Treasury, Finrex Treasury Advisors

“Asian currencies were a bit stronger as dollar index fell to 111.32 levels. The US 10-year yield was unchanged at 4.03% after the end of first day of the two-day FOMC meeting. The Rupee is likely to open at 82.70 levels and remain in a range of 82.40 to 83.00 as the FED meeting enters the second day. Nobody seems to be interested in the quantum of rate hike in November which is more or less decided at 75 bps. Everyone wants to know what the Fed’s language would be for the month of December-22. In respect of rupee, one needs to keep a watch on RBI which seems to be selling $ near to 78.80 levels. Exporters may sell near to 82.80 to 83.00 band, while importers may buy the dips.”

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Amit Pabari, MD, CR Forex Advisors

“With a 75 bps hike, if Fed maintains a hawkish tone for 2023, the DXY could move towards 112.50-113 levels and the USDINR towards 82.80-83.20 levels. If it indicates a dovish signal for 2023, we could see DXY falling towards 110-109.50 levels and rupee USDINR can move towards 82.00-82.20 levels. If it remains neutral for 2023, the DXY could remain flat around 111 levels and so the USDINR around 82.50-82.70 region. Post the Fed meeting, RBI policy will be closely watched by the markets. With these meetings concluding, the rupee is expected to remain in a range of 82.20 to 83.20 levels with a 70 to 80% probability. Well, if either of these sides will be taken out, a 50 paisa move could be seen on the side of a breakout which could be short-lived. Hence we suggest remaining well placed in terms of hedging to insure from the upcoming volatility.”

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