The rupee may depreciate on the strength of the dollar and weaker financial markets; USDINR pair to trade in this range

With oil prices holding above $100, the rupee could remain under pressure. However, as USD is sold by companies towards the end of the year, the upward movement will be slower.

The Indian rupee is expected to depreciate today on the back of a firm dollar and weaker financial markets. Market sentiment is being weighed down by fears that a rate hike will lead to higher borrowing costs, hurting global growth prospects. In addition, elevated oil prices have raised concerns about persistently high inflation and slower economic growth. Also, the rupee could slide further on continued selling by FPIs due to capital outflows. The rupee fell 34 paises against the US dollar on Monday as rising crude oil prices and a lackluster trend in domestic equities weighed on investor sentiment. In the interbank FX market, the rupee opened lower at 76.08 against the greenback, later losing further ground to settle at 76.18, down 34 paise from the previous close.

Gaurang Somaiya, FX & Precious Metals Analyst, Motilal Oswal Financial Services

“The rupee has been consolidating in a tight range over the past few sessions and volatility has been low after the Fed and BoE hiked rates at their monetary policy meeting. The rupee could continue its decline against the US dollar if global crude prices continue their gains. Yesterday, the dollar rose against its major crosses after comments from the Fed Chair that opened the door for the central bank to adopt a more aggressive monetary policy stance. The dollar gained ground after Powell said the central bank must act “quickly” to bring excessive inflation under control, using larger-than-usual rate hikes if necessary. No major economic data is expected out of the US today and that could keep momentum low for the dollar. We expect USDINR(Spot) to trade with a positive bias, trading in the 75.80 to 76.50 range.”

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

“USDINR spot prices closed at 76.12, up 32 paise. USDINR shot higher on the back of the rise in oil prices and the fall in equity markets. With oil prices holding above $100, the rupee could remain under pressure. However, as USD is sold by companies towards the end of the year, the upward movement will be slower. We’re looking at a broad range of 75.80 and 76.50 on the ground.”

Tapish Pandey, Research Analyst, SMC Global Securities

“The dollar-rupee is likely to trade on a firm note as the dollar strengthened on comments from Federal Reserve Chair Jerome Powell that opened the door for the central bank to take a more aggressive monetary policy stance. Additionally, Crude Oil is trading higher on signs that the European Union may move closer to a ban on Russian crude oil exports, which is likely to weaken the rupee. The dollar-rupee is expected to continue its upward rally after hitting support near 75.82-75.83 and also placing above all major moving averages, indicating strength in the pair. USDINR has immediate support around 76.00 followed by 75.82 while on the higher side resistance is seen around 76.85 holding above and could lead up towards 77.

Rahul Kalantri, Vice President Commodities, Mehta Equities

“The March 29 USDINR futures contract showed strength and started the new week on a positive note. The pair is trading near its resistance level of 76.30 on the daily technical chart. We have observed a pair recovering from its lows last week and approaching the 76.30 resistance level. Looking at the technical setup, a pair holding above 76.30 could show further strength towards 76.55-76.70; otherwise it can reach its main support level, ie 75.95.”

(The recommendations in this article are provided by the respective research analysts and brokerage firms. Financial Express Online accepts no responsibility for their investment advice. Market investments are subject to rules and regulations. Please consult your investment adviser before investing.)