Rupee likely to depreciate amid rise in crude oil prices; USDINR pair to trade in this range

Rupee likely to depreciate amid rise in crude oil prices; USDINR pair to trade in this range

The Indian Rupee is expected to depreciate on Thursday amid a rise in crude oil prices. Further, investors will keep an eye on macroeconomic data from the US to get a clear view on the US dollar index. “US$INR (August) is likely to trade in a range of 79.50-79.70,” said ICICIDirect. In the previous session, rupee gained 29 paise to settle at 79.45 against the US dollar on the back of heavy buying in domestic equities and persistent foreign capital inflows strengthening investor sentiment. Additionally, forex traders noted that softening crude oil prices and easing inflationary pressures supported the domestic unit.

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“On the other hand, surge in US Dollar capped sharp gains. Dollar gained on concerns over weak global economic growth and upbeat economic data. US capacity utilization rate increased to 80.3% in July compared to 79.9% in June while industrial production increased by 0.6% in July compared to 0% in June. We expect Rupee to trade on mixed to negative note. Positive US Dollar and concerns over global economic slowdown may put downside pressure on Rupee. However, FII inflows, weak oil prices and rise in risk appetite in global markets may support Rupee at lower levels. Markets participants may take cues from US retail sales and FOMC minutes. USDINR spot price is expected to trade in a range of Rs 78.80 to Rs 80.50 in next couple of sessions.”

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

“USDINR spot closed 20 paise lower at 79.44. Fall in oil prices and higher global equity markets helped Rupee to gain against US Dollar. FPI flows have been persistently positive and that is positive for Rupee. However, there are corporate outflows lined up over this week and that can limit downside in USDINR. Over the near term we expect a range of 79.00 and 80.00 on spot.”

Sugandha Sachdeva, Vice President – Commodity and Currency Research, Religare Broking

“The Indian rupee has edged higher amid a “risk on” mood and splendid gains witnessed in the domestic equities. After almost nine months of incessant outflows, domestic equities are seeing net inflows since July. Besides, the decline in crude oil prices has eased concerns about elevated inflation, further supporting the domestic currency. On the contrary, retreat in the dollar index from a six-week low tested last week is still acting as a key headwind for the local unit and restricting gains in the rupee-dollar exchange rate beyond the 79.20 mark.”

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“The greenback hit a low of 104.63 last week amid a softening of inflation in the US, which eased bets of another large rate hike at the Fed’s September meeting. However, inflation remains pinned around 40-year highs and hawkish comments from several Fed officials indicate that the US Fed is still likely to opt for steep rate hikes and act tough on persistently high price pressures. Markets are now eyeing the minutes of the Fed’s July meeting for further cues about the monetary policy path of the US central bank that will further dictate the trend for the Indian rupee. We envisage the rupee to trade in the 79.20-80.10 range in the coming days.”