Rupee likely to depreciate on strong dollar, risk aversion in markets; USDINR pair may trade in this range

Rupee likely to depreciate on strong dollar, risk aversion in markets; USDINR pair may trade in this range

The Indian Rupee is likely to depreciate on strong dollar and risk aversion in markets as investors remain cautious ahead of US Fed meet on 20-21 September. USDINR spot price is expected to trade in a range of Rs 79-80.50 in the next couple of sessions, according to forex analysts. In the previous session, Rupee marked its worst week in five as risk sentiment was hit by the Chinese yuan weakening past 7 per dollar to breach a key psychological level for the first time in two years. The local unit settled 0.1% lower at 79.74 per dollar, recouping some of the day’s losses when it had hit an over one-week low. For the week, the rupee declined 0.2%, its biggest loss since the week ended 12 August.

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“Concerns over aggressive rate hike expectations by Federal Reserve may also put downside pressure on Rupee. However, easing crude oil prices may support Rupee at lower levels. Markets may also take cues from FII fund flows data. Trades may also take cues from US consumer sentiment which is expected better than previous reading. 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, Kotak Securities

“USDINR spot closed 4 paise higher 79.74 in a day of quiet trading. Rise in dollar index, firm US bond yields and weakness in equities contributed to the demand for the US Dollars but exporter selling and suspected central bank intervention capped advance. Over the next week, USDINR may slip into a narrow range of ahead of US FOMC. We expect a range of 79.40 and 80.00 on spot.”

Yes Securities Research

“US Dollar index rallied while Treasury yields surged after data showed U.S. consumer prices rising faster than expected in August, prompting bets for more aggressive Federal Reserve rate hikes. Decline during the week found support near 79.20, recovery thereafter was swift which ensures immediate support near 79.40. USDINR September future is likely to oscillate between 79.40 – 80.30 zone.”

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

“Rupee in the last few sessions consolidated in a narrow range and volatility remained low even after inflation number from the US and the UK came above estimates. On Friday, the dollar fell marginally against its major crosses even after University of Michigan’s preliminary September reading on the overall index on consumer sentiment came in at 59.5, up from 58.6 in the prior month. Broadly, the dollar could continue to get support ahead of the FOMC policy statement. Most market participants expect a high chance of a 75-basis-point rate hike at this week’s meeting and some even expect a 100-bps increase.”

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“The Rupee was slightly weighed down after the offshore yuan past the critical threshold of 7 per dollar for the first time in more than two years overnight. On the other hand, pound remained under pressure after retail sales fell much more than expected in August, in another sign that the economy is sliding into a recession as the cost of living crunch squeezes households’ disposable spending. Today, volatility could remain low as no major economic data is expected to be released from the US. We expect the USDINR(Spot) to trade sideways and quote in the range of 79.40 and 80.05.”

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