Rupee likely to depreciate on strong US dollar, elevated crude prices; USDINR to trade in this range

Rupee likely to depreciate on strong US dollar, elevated crude prices; USDINR to trade in this range

The Indian rupee is expected to depreciate against the US Dollar, taking cues from weak regional peers, risk aversion in markets, dollar hitting two-decade high. USDINR(Spot) is expected to trade sideways and quote in the range of 79.40 and 79.80In the previous session, rupee weakened as a surging dollar pinned down major currencies. Hawkish stance from central banks and a lockdown in China further dampened investor nerves. The local unit slipped 4 paise to close at 79.56 against the greenback. Weakening oil prices and exporters selling dollars shielded the domestic currency from a selloff in global risk assets.Dilip Parmar, Research Analyst, HDFC Securities

The Indian Rupee could open slightly lower taking cues from weaker regional peers but the recovery in risk assets and lower crude oil prices could help limit the loss. On Thursday, spot USDINR gained 10 paise to 79.55, underperforming among Asian peers amid exporters’ dollar selling and news of Russia considering adding $70b FX of “friendly nations”.

“Technically, spot USDINR has been turning weak as it closed below the short-term moving averages and momentum oscillators are also turning weak. The pair is having support at 79.20 and 78.80 while resistance remains in the area of 79.70 to 79.90. A gauge of the dollar’s strength climbed to a record high Thursday, as longer-dated Treasury yields advanced and pushed past the previous peaks hit in July. The greenback hovered near two decades high ahead of key US jobs data that could stir expectations for another sharp Federal Reserve interest-rate hike.”

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

“USDINR spot closed 10 paise higher 79.55, after making an intra-day low of 79.29. Long liquidation drove prices downward but demand from large corporate pushed the pair closer to high of the day. Over the near term, USDINR may continue to trade within a range due to contrasting factors: lower oil prices but higher US Dollar Index. We expect a range of 79.20 and 79.85 on spot the near term.”

“Rupee traded with high volatility in yesterday’s session as choppiness continued in domestic equities as well. Dollar continued to move higher after U.S. data showed a resilient economy, giving the Federal Reserve more room to aggressively hike interest rates to quell inflation. U.S. manufacturing grew steadily in August, as employment and new orders rebounded. ISM showed a sharp rebound in manufacturing employment in August after three straight months of contraction. Initial claims for state unemployment benefits decreased 5,000 to a seasonally adjusted 232,000 for the week ended Aug. 27, the lowest level since late June.”

Also Read: Share Market LIVE: SGX Nifty hints at positive start for Nifty, Sensex; Services exports jump to $23.26 bn

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

“All eyes are now on U.S. August nonfarm payroll data due today; expectation is that 285,000 jobs were added last month, while unemployment hovered at 3.5%. Investors still expect job growth to slow, especially with worker productivity continuing to plummet at unsustainable rates, putting upward pressure on labor costs.We expect the USDINR(Spot) to trade sideways and quote in the range of 79.40 and 79.80.”