Rupee likely to remain rangebound amid risk aversion in markets, strong dollar; USDINR pair to trade sideways

Rupee likely to remain rangebound amid risk aversion in markets, strong dollar; USDINR pair to trade sideways

The Indian Rupee is likely to remain stable amid volatility in global equity markets, stability in crude prices at $95 per barrel and strength in dollar. USDINR pair is opened slightly higher on Friday and is expected to trade sideways in the range of 82.50 and 83.30. In the previous session, rupee depreciated against the US dollar after the US Federal Reserve raised interest rates and maintained a hawkish stance. At the interbank foreign exchange market, the local unit opened at 82.87 and it fell intraday to finally settle at 82.90 against the American currency, down 10 paise over its last close. Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 1.39% to 112.89.

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“Rupee consolidated in a narrow range even after the release of FOMC policy statement that was released this week. The Fed, in line with expectation, raised rates by75bps but after the initial reactions on the downside the dollar regained some strength after Federal Reserve Chair Jerome Powell said it was premature to discuss a pause in its hiking of interest rates to battle rising consumer prices, as there is “no sense that inflation is coming down.”He added that a change in pace in rate hikes could come at the Fed’s next meeting in December.”

“Yesterday, pound fell sharply against the US dollar after the Bank of England raised rates by 75bps but warned investors that the risk of Britain’s longest recession in at least a century means borrowing costs are likely to rise less than they expect.The BoE said it now expects inflation will hit a 40-year high of around 11% during the current quarter, more than five times its 2% target. Today, focus will be on the non farm payrolls number from the US and a higher number could extend gains for the dollar. We expect the USDINR(Spot) to trade sideways and quote in the range of 82.50 and 83.30.”

Anil Kumar Bhansali, Head of Treasury, Finrex Treasury Advisors

“USDINR to open around 82.70 as the dollar index fell to 112.70 levels after UK’s BOE hiked the rate of interest by 75 bps. The dollar-buying syndrome was back in the markets after FED hiked rates by 75 bps a day earlier and sounded hawkish in its tone. Oil was stable around $95 per barrel. US 10-year was at 4.15%. Asian currencies were stable though weak with CNH at 7.32 while IDR was at 14750 levels. Rupee likely to move in a range of 82.50 to 83.00 range as RBI continues to sell $ at 82.90 levels while oil and importers remain buyers expecting the rupee to touch 83.50 by the end of this month. Exporters to sell near to RBI pivot at 82.90 while importers to continue buying dips and good dips as $ buying restarts after a brief pause.”

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

“After the FED policy was out, and the FED chair’s main objective was to draw the attention of the participants from, how fast the rates are increasing to where the rates must be and how long they must be at that level. He mentioned that the terminal rate will be higher than 4.50-4.75 which the Fed had projected back in the month of September. This delivery was considered bullish by most of the traders and the participants, and we saw the US 10-year bond yields move swiftly above the 4.20% mark. For the USDINR pair, we had yet another sluggish session, and the pair protected the 82.80 mark for the third session straight and closed above the 83.00 mark. The fact that the 82.80 level is held so strongly, says that there is a lot of upward push on the pair.”

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