The Indian rupee is likely to depreciate further as the dollar would continue to remain strong. Elevated crude prices, interest rate hike fears, recession concerns are also expected to weigh on the domestic currency. USDINR spot price is expected to trade in a range of Rs 79 to Rs 80.50 in next couple of sessions, according to analysts. In the previous session, rupee declined against the US dollar tracking a strong dollar in overseas markets and losses in the domestic equities. At the interbank foreign exchange market, the local unit opened at 79.93 per dollar, and settled at 79.89, down 7 paise over its previous close.
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“We expect Rupee to remain weak on strong US Dollar and weak cues from global markets. Dollar index surged to a fresh 20-year high and is currently trading around 110.45 levels. Recovery in crude oil prices from lower levels may also weigh on Rupee. However, FII inflows may support Rupee at lower levels. Markets may also take cues from US trade deficit which is expected better than previous month. USDINR spot price is expected to trade in a range of Rs 79 to Rs 80.50 in next couple of sessions.”
Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services
“Rupee continued to trade in a narrow range despite volatility in major crosses and also as the dollar rose to its highest level in 20-years. On the domestic front, focus will now be shifting to inflation and industrial production number that will be released next week. Expectation is that inflation could start to cool-off and that thereby support the rupee in the very short term. Dollar retraced against its major crosses yesterday after data showed trade deficit in the US narrowed in July as exports hit a record high, a trend that could see trade continuing to contribute to gross domestic product in the third quarter.Trade deficit declined 12.6% to $70.6 billion; exports of goods and services edged up 0.2% to $259.3 billion, while imports fell 2.9% to $329.9 billion.”
“Pound has been one of the weakest amongst the major crosses on the back of bleak economic outlook and the soaring dollar. The currency has been hit hard by surging inflation, a looming recession and concerns that tax cuts and increased public spending under a new government could exacerbate price pressures. Today, market participants will be keeping an eye on the ECB policy statement and hawkish comments from the governor could restrict losses for the Euro. We expect the USDINR(Spot) to trade sideways and quote in the range of 79.40 and 80.05.”
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Amit Pabari, MD, CR Forex Advisors
“The rupee has remained the best performer for the past three weeks as the pair has weakened merely by 0.80% vs other Global and Asian peers. RBI’s foot into currency intervention, inflows, and subdued oil prices have prevented the USDINR pair to flow in line with global fundamentals so far. That apart, the talks about India’s inclusion in JP Morgan’s global bond index would open up prospects for further inflows into the Indian Bond market. However, if the rupee is kept overvalued compared to the Chinese Yuan and other EM’s by using reserves and interventions, it will lead us to lose competitive advantage and make the exports less appealing. Nevertheless, as long as 80.10 is protected, selling above 79.90 is advisable. On the flip side, the near-term bottom for the pair seems to be around 79.40-79.20 levels which is less likely to be taken out.”
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