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Rupee likely to depreciate on firm dollar, elevated crude prices; USDINR pair to trade sideways in this range

The Indian rupee expected to trade sideways to bearish after depreciating in last four months amid higher crude oil prices, geopolitical uncertainties, stronger dollar index, risk-off sentiments and foreign fund outflows. In the previous session, the local unit appreciated against the American currency, tracking a weak greenback overseas and fresh foreign fund inflows. At the interbank forex market, rupee opened at 76.62 against the US dollar. It moved in the range of 76.63 to 76.29 during the day trade before finally settling at at 76.43, registering a rise of 18 paise over its previous close. So far this year, rupee has depreciated 2.82% to 76.43 a dollar. “USDINR May futures expected to head towards life higher of 77.50 while on downside it will find support around 75.50,” according to HDFC Securities.

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

“Rupee consolidated in a broad range despite sharp gains in the dollar against its major crosses. On the domestic front, volatility has been curtailed as the RBI actively intervened to curb sharp depreciation of the currency. Latest data released by the RBI showed that reserves have trimmed in the last few weeks and for the week ended April 22nd reserves fell for the seventh straight week to $600.42 billion from $603.69 billion reported a week earlier. Dollar continued to rally against its major crosses despite a weak GDP number released from the US. Today, focus will be on the ISM manufacturing PMI number and better-than-expected data could extend gains for the dollar. We expect the USDINR(Spot) to trade sideways and quote in the range of 76.20 and 76.80.”

ICICI Securities–Retail Equity Research

Rupee future maturing on May 27 appreciated by 0.20% amid retreat in dollar from its multiyear high and on anticipation of inflows related LIC IPO. Rupee is expected to depreciated today amid risk aversion in the global markets and firm dollar. Market sentiments are hurt on fears that soaring inflation and rising interest rates will hurt global economic growth. US Federal Reserve is likely to raise interest rates by 50bps and announce plans to reduce its $9 trillion balance sheet in its upcoming policy meet. Further, rupee may slip on surge in crude oil prices.”

Tapish Pandey, Senior Research Analyst, SMC Global Securities

“The Indian rupee likely to trade mixed as both US dollar and Indian Rupee are showing strength. Dollar Index is trading near 103.50 highest level since early 2017 on expectation of FOMC rate hike later this week, while on other side, Indian rupee is also getting strength on back of several IPO flows expectation indicating much-awaited Rs 21,000 crore mega LIC IPO. USDINR near month future price is consolidating in range of 76.39 to 77.09 levels from last few trading sessions which are going to act as immediate support and resistance respectively. However, overall trend for USDINR is still bullish as it holds above it key moving averages. On down side below range next support is placed around 76.11 levels while on higher side, if it manages to sustain above 77.09, USDINR will resume it upwards rally. For now, we are looking USDINR to trade in the same range for coming session as mixed direction hence we can try buy on dip near support levels or sell on rise near 77 marks for intraday only.”

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

“USDINR pulled back from 76.89 to 76.50, near its support on futures, as month end selling and global cues drove the US Dollar lower. There were media reports that SWFs are showing interest in LIC IPO and that may have also helped the sentiments in Rupee. Globally US Dollar came under selling pressure, possibly due to profit taking on major pairs. All in all, it is turning out to be one more day within the range 2 weeks range of 76.00 and 76.80 on spot. As long as this range is respected, option sellers will have the upper hand.”

(The recommendations in this story are by the respective research analysts and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Market investments are subject to rules and regulations. Please consult your investment advisor before investing.)



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