Rupee likely to depreciate on strong greenback, risk aversion in markets; UDINR pair to trade in this range

The Indian Rupee is is likely to depreciate on Thursday amid strong greenback, risk aversion in home, international markets. “Rupee is likely to kick off the day around a sticky level of 77.60 and expected to have another narrow day between 77.45 to 77.80,” mentioned specialists. In the earlier session, the rupee on recovered from its report low in opposition to the US greenback. At the interbank foreign exchange market, the rupee opened at 77.58 in opposition to the dollar and moved in a range of 77.51 to 77.62 in the day’s trade. The native unit ended at 77.51, increased by 20 paise over its earlier shut. “USDINR is rangebound between 77.40 and 77.80 on spot. Buying near 77.60/70 zone is advisable with stops below 77.55. Option sellers need to reduce their bet size as option premiums have become way too low for comfort,” mentioned Anindya Banerjee, VP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities.

Amit Pabari, MD, CR Forex Advisors

“After correcting more than 3.5% over the last fortnight of May, the US dollar index rebounded sharply by 1.20% in recent trading days due to few reasons. Firstly, *US 10-year yield jumped from 2.70% to 2.95% amid expectation of elevated inflation in the near-term future due to higher oil prices. Secondly, Fed started its Quantitative Tightening on 1st June worth $47.50 billion per month for the first three months. This added upward pressure on the real yields. That apart, stronger US ISM manufacturing PMI and an optimistic Beige book supported the rally in USD. The Risk-off sentiment again took charge as the equity market halted its recovery move and started correcting down. Lastly, a strong correction in DM and EM currencies due to risk-aversion trade helped safe-haven demand in USD.”

“Surely, it was a warm welcome to the Fed’s Quantitative Tightening of the US dollar. But when asked- “How’s the Josh?” to the Indian Rupee, the answer remained “Low sir”. Carry merchants, hedgers, and speculators, all are uninterested in watching the identical rate of 77.45-65 zone. The volatility hasn’t been that low, at the least for the reason that COVID interval. And that factors out the upcoming increased volatility. Today, the Indian Rupee is likely to kick off the day round a sticky stage of 77.60 and anticipated to have one other slender day between 77.45 to 77.80. The purpose behind the identical is matching up of bid aspect by FIIs/ oil importers and promote aspect by exporters/RBI. Now all eyes flip to right now’s OPEC-JMMC Meetings and US non-public payroll knowledge. Any sharp strikes in the oil costs by $6-8 may certainly name a giant transfer in the USDINR pair. Overall, a break beneath 77.45 will take the pair additional decrease in the direction of 77.10 and 76.80 ranges. Whereas, rapid resistance is situated close to 77.80 and additional at 78 ranges.”

Tapish Pandey, Senior Research Analyst, SMC Global Securities

“The Indian Rupee is likely to trade on a mixed note as Saudi Arabia is prepared to raise its oil production if Russia’s output falls substantially because of the western sanctions imposed on it, the Financial Times reported on Wednesday, citing sources. The Dollar-Rupee is consolidating in a range of 77.51 to 78.03 near month future levels from last few trading sessions, for the near future same range will act as strong support and resistance respectively. the current trading setup suggests USDINR in the near month future is likely to remain in the same range for the coming session however any move beyond the above-mentioned range may decide further movement in the same direction in which the range has broken. The overall trend for USDINR is bullish hence any dips towards lower levels same range may be utilized as a trading opportunity by keeping a stop loss below 77.25 levels.”

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

“Rupee continued to trade in a narrow range and volatility remained low despite weakness in domestic and global equities. On the domestic front, GDP and fiscal deficit number did not have much of an impact on the currency. Marginal weakness in the rupee was also as global Oil prices strengthened following the move by European Union leaders to gradually phase out Russian oil even as China ended its stiff COVID-19 lockdown in Shanghai, which could bolster demand for crude in an already tight market. Yesterday, the dollar rose against its major crosses despite better-than-expected manufacturing PMI number from the US.”

“Data showed U.S. manufacturing activity picked up in May as demand for goods remained strong even with rising prices. Pound fell against the US dollar after British manufacturing activity expanded in May at the weakest rate since January 2021, as producers of consumer goods struggled against a worsening cost-of-living crunch. Money markets still discount an aggressive monetary tightening path from the BoE despite concerns of economic slowdown as they price in 140 basis points of BoE rate hikes by year-end. Today, focus will be on the private payrolls number from the US and better-than-expected economic data could extend gains for the dollar. We expect USDINR(Spot) to trade sideways and quote in the range of 77.05 and 77.80.”

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