Rupee likely to appreciate on weak dollar, rise in risk tolerance in markets; USDINR to trade in this range

Rupee likely to appreciate on weak dollar, rise in risk tolerance in markets; USDINR to trade in this range

The Indian rupee is expected to appreciate on Tuesday amid weakness in dollar. Further, investors will focus on existing home sales data as it is expected to decline from 5.61 million (mn) to 5.39 mn. However, unabated foreign fund outflows may restrict the appreciation bias in the rupee, said ICICIDirect. USDINR is expected to break its immediate support level of 77.90 and continue its downward move towards the level of 77.75. The rupee appreciated against the US dollar as crude oil prices retreated from elevated levels. However, unabated foreign fund outflows restricted the appreciation bias in the rupee. At the interbank forex market, the local unit opened strong and settled at Rs 77.98, a rise of 7 paise over its previous close.Dilip Parmar, Research Analyst, HDFC Securities

“The Indian rupee is expected the open slightly positive following a stronger Chinese yuan and recovery in risk-assets. The dollar has been benefiting more than usual from risk aversion as other haven currencies are stumbling and as the risk assets stabilise there is a chance of unwinding the dollar long. Monday was a quiet day across the forex markets, as volumes were thin due to US holidays. Spot USDINR opened below 78 but due to persistent weakness in the local stocks, pushed the pair slightly higher but closed at 77.98 with a loss of 10 paise from the previous day. The pair is expected to consolidate in a range of 77.80 to 78.30 before heading north.”

Amit Pabari, MD, CR Forex Advisors

“After falling its biggest weekly drop in 2 years, Indian indices took some relief. This coupled with DXY remaining lower near 104 levels, Bond yields remaining below 7.5% has given some breather to the rupee leading to its appreciation as seen yesterday. However, that remained quite short-lived and precise due to demand from oil companies and importers leading to the rupee falling back again above 78 mark. Also, the oil prices resumed its rising journey after US, Canada and other allies are in talks for imposing price cap on Russian oil. Hence keeping the sword intact on rupee. With RBI’s management, the rupee shall remain in a tight range of 77.80-78.20. If the range is broken on either side, it can lead to a movement of 30 to 50 paisa.”

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