Rupee likely to appreciate on weak dollar, risk aversion in global markets; USDINR pair to trade in this range

The Indian rupee is expected to appreciate on Wednesday amid a soft dollar and rise in risk appetite in the global markets. Meanwhile, investors will remain vigilant ahead of US Federal Reserve Chairman Jerome Powell’s speech. “Additionally, capital outflows due to sustained selling by FPI’s will hurt the rupee. Market participants fear that support for European ban on Russian oil is growing inside the bloc, raising the possibility of volatility in crude oil prices,” said ICICI Direct. In the previous session, rupee pared its initial losses to settle flat at 76.18 against the greenback, tracking a positive trend in domestic equities. At the interbank foreign exchange, the rupee opened sharply lower at 76.39 against the American currency. However, it recovered all its losses to closed at 76.18.

Heena Naik- Research Analyst – Currency, Angel One

“On 22 March, USDINR made a gap up opening at 76.42 levels from its previous closing of 76.11 after the U.S. Federal Reserve Chair Jerome Powell signaled a willingness to raise rates more aggressively to combat inflation. However, soon the local unit turned positive on account of suspected IPO-related inflows into the system. In the upcoming session, the Indian Rupee is likely to continue with its positive trend towards 75.80 levels on expectations of more inflows coming in along with possible dollar selling by IT companies on account of year-end closing.”

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

“USDINR spot closed 6 paise higher at 76.17, after a volatile session. A sharp run up in oil prices in the morning, coupled with spike in US yields caused USDINR to aim for the resistance level of 76.50. However, selling from exporters and PSUs pulled the pair back below 76.20 on spot. As oil prices reversed , equity markets rallied. This added further pressure on the USDINR. Over the near term, we expect USDINR to trade within a range of 75.80 and 76.50.”

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

“Rupee fell in the first half of the session but rose in the latter half as global crude oil prices retraced from higher levels. In the last couple of sessions, reaction for the rupee has been led by how crude and dollar have been moving. Weakness in the rupee was seen on expectation of higher inflation going ahead on back of high energy cost. Early in the week, comments from the Fed Chairman boosted the dollar as he opened doors for raising interest rates by more than 25 basis points at upcoming policy meetings in order to combat inflation. But yesterday most of the gains faded after and a rise in equities markets help boost risk-on sentiment. Today, market participants will be keeping an eye on the inflation number that will be released from the UK and also Fed and BoE governors comments and that is likely to trigger volatility for major crosses. We expect the USDINR(Spot) to trade with a positive bias and quote in the range of 75.80 and 76.50.”

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