Rupee likely to depreciate ahead of CPI inflation data; USDINR pair to trade in this range

Rupee likely to depreciate ahead of CPI inflation data; USDINR pair to trade in this range

The Indian rupee is expected to depreciate on Friday amid expectations of weak macroeconomic data from India. CPI year-on-year is expected to drop from 7.01% to 6.78%. Additionally, industrial production is expected to drop from 19.6% to 10.7%. USDINR (August) is likely to trade in a range of 79.70-79.90, according to ICICIDirect. In the previous session, rupee depreciated by 36 paise against the US dollar amid rising crude oil prices. At the interbank foreign exchange market, the local unit opened at 79.22 and saw an intra-day high of 79.22 and a low of 79.69 against the greenback before it finally ended at 79.61, down 36 paise over its previous close of 79.25. Rupee is likely to trade on a mixed note in the near term, according to forex traders.Anil Kumar Bhansali, Head of Treasury, Finrex Treasury Advisors

“The Indian rupee is expected to open at 79.60 after heavy buying of $ by the Government, Defence and oil took it from 79.24 to 79.65 levels yesterday despite a fall in the dollar index and a rise in Asian currencies. The demand may continue today due to holidays in the next week beginning. The range for the day is between 79.40 to 79.80. With good rains all over the country in general inflation is expected to fall. Oil prices, however, are hovering near $100 per barrel which is a matter of concern for the Rupee and CAD. Exporters may sell near to 79.80 levels keeping a watch on RBI while importers may buy the dips.”

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

“Rupee erased most of its gains of the previous session following suspected oil related buying. Earlier in the week, data showed US CPI increased by a slower-than-expected at 8.5% followed by a 9.1% rise in June. The dollar recorded its biggest decline in five months following the report as traders readjusted their forecasts to factor in the chance that inflation may have peaked. On the domestic front, inflation number too will be released and that is likely to trigger volatility for the currency. Expectation is that inflation could come in lower and support the rupee at lower levels.”

“From the US, data showed producer prices unexpectedly fell in July amid a drop in the cost for energy products and underlying producer inflation appears to be on a downward trend, while jobless claims rose for a second straight week in a labor market that remains tight. Today, focus will be on the prelim GDP number that will be released from the UK and preliminary consumer sentiment number from the US. Better-than-expected economic data from the US is likely to provide support to the dollar that has been weighed down in the last few sessions. We expect the USDINR(Spot) to trade sideways and quote in the range of 79.20 and 79.80.”

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

“USDINR spot closed 11 paise higher at 79.63, thanks to demand for dollars from oil marketing companies and importers. There may have been some RBI intervention at lower levels to build reserves. Overall bias remains of a range between 79.00 and 80.00 levels on spot.”

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