Dec 28, 2023
Rupee opens flat, may depreciate on FII outflow, elevated crude prices; USDINR to trade in this range
Rupee opened marginally higher at 82.69 per dollar on Wednesday against the previous close of 82.70 per dollar. The local unit is expected to depreciate today amid persistent FII outflow and surge in crude oil prices. Meanwhile, investors will closely watch RBI’s monetary policy, where the central bank is expected to hike interest rate by 25 bps to 6.50%. “The US$INR is likely to surpass the hurdle of 82.85 to continue trading towards the level of 83.00,” said ICICIdirect.
Rupee to trade in 82.40 – 83.10 range
In the previous session, rupee recovered after Monday’s sharp sell-off amid long unwinding ahead of the RBI monetary policy decision. The stable dollar index and recovery in domestic equities also supported the rupee in today’s trade. However, the bias for the rupee remains bearish following foreign fund (FII) outflows and weak technical chart set-up. We believe the central bank may try to protect the level of 83 but the direction could be difficult to change. “In the near term, spot USDINR has support at 82.10 and resistance at 83.10,” said Dilip Parmar, Research Analyst, HDFC Securities.
USDINR to trade sideways
“Rupee consolidated in a narrow range and volatility remained low ahead of the important RBI policy meeting scheduled today. The central bank is expected to raise rats by 25bps but importantly market participants will be awaiting for cues on inflation and growth going ahead. While headline CPI has eased, core inflation remains sticky. Most investors expect that the stance could continue to be a withdrawal of accommodation, even as liquidity is close to neutral,” said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.
“On the other hand, dollar traded with high volatility after the Federal Reserve Chairman said that disinflation “has begun” but is going to take time. He added that if the data shows that inflation is running hotter than the Fed expects, that will mean higher rates. A couple of Fed members are also expected to speak today and that could trigger further volatility for th greenback. We expect the USDINR(Spot) to trade sideways and quote in the range of 82.40 and 82.90,” Somaiya added.
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