Rupee likely to remain under pressure amid risk aversion in global markets; USDINR pair to trade higher The Indian rupee is expected to depreciate on Thursday amid risk aversion in global equity markets, strength in US Dollar. RBI could intervene in the spot market to control volatility, according to Forex analysts. Overall, USDINR pair is expected to trade higher in a range of 82.00 to 83.20 levels and a breakout on either side will determine further course. In the previous session, rupee depreciated against the US dollar, tracking a muted trend in domestic equities ahead of the release of the US Fed’s policy statement. At the interbank foreign exchange market, the local unit opened at 82.64 and settled at 82.78 against the American currency, registering a fall of 19 paise over its previous close of 82.59. Also Read: Will bears drag Nifty below 18000? Bikaji Foods, Medanta IPO opens; key things to know before market opens “The USDINR pair traded in a tight range, as the traders avoided speculating ahead of the FED policy outcome. The range has shrunk even further and the pair moved between 82.80 and 83.00 throughout the day.” Anil Kumar Bhansali, Head of Treasury, Finrex Treasury Advisors “The FED said that smaller rate hikes were on the offing and gave market half an hour of rejoicing before saying that it is not done with rate hikes. The Dow Jones plummeted by 505 points and all risk assets fell as dollar index rose to nearly 112 and US 10 year to 4.40%. The commentary was not dovish at all. Oil was higher at $95.50 per barrel while GBP and Euro were lower after the hawkish FED comments. USDINR likely to open higher at 82.90 as Asian stock markets fall and SGX Nifty was down by 30 points. Markets now await for the NFPR data on Friday which is expected to be strong keeping dollar strength continuing. Range for the day is 82.50 to 83.20. Exporters may sell dollars at 83.00 levels keeping a close watch on RBI while importers may continue to buy sll dips they get.” Also Read: Share Market LIVE: Nifty, Sensex stare at gap-down start; Fed hikes rate by 75 bps, RBI MPC outcome eyed Amit Pabari, MD, CR Forex Advisors “Overnight global rout in financial markets is likely to haunt the fragile Rupee. So far its trading tad bit stronger from its all time low, helped by resumption in the FII inflows which brought about 11000 crores in merely two sessions of Nov, as the sentiments accross had improved. Well, the continuation of the same will depend on how RBI holds on to policy amid aggressive Fed. Today RBI will have its unscheduled MPC meeting, which is majorly expected to be a non-event and RBI Governor Das said a letter that will be sent to the government will not be made public after the Nov 3 special meeting because the bank does not have the authority to release it. Today we could see the RBI could intervene in the spot market to control volatility. Overall, we expect the USDINR pair to trade higher in a range of 82.00 to 83.20 levels and a breakout on either side will determine further course.” (The recommendations in this story are by the respective research analysts and brokerage firms. FinancialExpress.com does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)
If the current trend continues for a longer period of time, not only oil mills but oilseeds growers will also not be able to get good rates of their produce, says Samir Shah, president of Gujarat State Edible Oils and Oil Seeds Association (GEOA). Shah who is also past president of SOMA says that due to various international factors rates of edible oils had gone up considerably, especially imported oils earlier this year.
“With a view to curb rising prices of edible oil, the Government of India reduced import duty on edible oils. Considering the fact that India is producing hardly 30 percent of its edible oil requirement, the decision was right at that point of time. Now when international prices of edible oils have gone down by 15 percent to 25 percent and high production period has started in edible oil exporting countries, the government should gradually increase import duty to protect local oil mills and oilseeds growers,” said Shah. GEOA has also made representation before Union Minister for Commerce & Consumer Affairs, Piyush Goyal to increase import duty.
In June import duty on edible oils was ranging from 35 to 55 percent, since then the government gradually reduced import duty and at present it is ranging from zero percent to 15 percent on different edible oils, he said.
Just a month back prices of edible oils were through the roof and the government took appropriate measures by reducing import duty in order to protect consumers, says Atul Chaturvedi, president of Solvent Extractors Association of India (SEA). “Prices of edible oils are coming down globally. Kharif sowing has already started across the country. In the interest of local farmers, it is high time to enhance import duty in a phased manner to encourage local edible oil value chain,” opined Chaturvedi.
On Thursday imported Palm oil prices were at around Rs 2100 per 15 kg as against local Rs 2700 and Rs 2550 of groundnut and cottonseed oils. Prices of other local oils including ricebran, coconut, soyabean and mustard remained as high as Rs 2350, Rs 2520, Rs 2500 and Rs 2580 respectively.
India imports around 13-13.5 million tonnes of edible oils, of which around 8-8.5 million tonnes (around 63 per cent) are palm oil. Though the price of other imported Sunflower oil remained at around Rs 2700 per 15 kg, but import quantity of the oil is much lower than that of palm oil.