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Rupee likely to remain rangebound amid market volatility; USDINR pair to trade sideways in this range

The Indian rupee likely to remain range-bound on Tuesday amid volatility in home and international equities. FPI outflows, lack of carry trade bets could proceed dragging the rupee decrease. The short-term range for the USDINR pair is likely to be pegged between 76.80 to 78.00, in accordance to foreign exchange analysts. In the earlier session, rupee recovered from report lows and settled increased in opposition to the US greenback, supported by a weak buck abroad. At the interbank foreign exchange market, the home unit opened at 77.69 in opposition to the buck It moved in a range of 77.51 to 77.69 throughout the session, earlier than lastly snaping its three-session dropping streak to shut at 77.55, registering an increase of 15 paise over its earlier shut.

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

“Rupee continued to trade in a narrow range for the last few sessions despite volatility in domestic and global equities. On the domestic front, lack of cues also kept the momentum low for the currency. This week, on the domestic front, no major cues are lined up and the rupee is likely to be influenced more by how the dollar moved against its major crosses. Yesterday, the Euro rose sharply against the US dollar after the European Central Bank indicated a move from negative interest rates.”

“ECB President Christine Lagarde said in a blog post that the bank was likely to lift the euro area deposit rate out of negative territory by the end of September and could raise it further if it saw inflation stabilizing at 2%. But she cautioned that the pace and size of those rate increases could not be determined at the outset as the economy faced supply shocks such as China’s pandemic-related restrictions and disruptions related to the war in Ukraine. Today, focus will be on the preliminary manufacturing PMI number from the US, Euro zone and the UK. At the same time, speech from Fed Chairman and ECB president will be keenly eyed. We expect USDINR(Spot) to trade sideways and quote in the range of 77.05 and 77.80.”

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

“A soft dollar index, improved global risk sentiment and strong Chinese Yuan, all acted in unison to bring USDINR lower, but only managed a 13 paise drop. Indian Rupee continues to be an underperformer and that’s why it is unable to participate in the short covering rally in other currencies. FPI outflows and lack of carry trade bets are factors that dragging the Rupee lower. Over the near term, we expect USDINR to remain rangebound between 77.30 and 78.00 levels. Option sellers continue to do well as historical realised volatility undershoots implied volatility in options.”

Amit Pabari, MD, CR Forex Advisors

“It was for the third time, that the USDINR pair took resistance near the 77.70-77.80 zone and corrected back to 77.50 levels. Yesterday’s move was partly observed after the RBI governor’s positive comments on the interest rates, inflation, liquidity, and economic activity and a further fall was observed in the pair due to a sharp correction in the US Dollar index. Today, the Indian Rupee is expected to open around 77.55 and is likely to trade in a range of 77.35 to 77.75 zone. The USD weakened as FOMC members’ hawkish tone was discounted and peer currencies like Euro and Pound gained traction. Today, the focus will be on flash manufacturing PMI from major regions and speeches from Powell & Lagarde”

“The local equities were seen again under pressure yesterday as positive news of central government’s excise duty cut on petrol/diesel, increase in fertilizer/gas cylinder and cutting custom duty on few products neutralized after news of export duty hike on 11 iron and steel intermediates by 15%. The big daddy- FIIs have sold almost Rs. 30,000 crores worth of stocks and bonds from the Indian market. Other factors impacting the Rupee such as US yields and Crude oil prices are silent for time being but could be an early indication of upcoming higher volatility. RBI’s selling spree, exporter’s rush, and minor FDI flows are helping Rupee to remain well near the 77.50 mark. Thus, the short-term range for the pair is likely to be pegged between 76.80 to 78.00.”

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