Indian Rupee Amid higher crude oil prices, a firmer US dollar and risk aversion in domestic markets, further downside is likely on Wednesday. Today the focus will be on manufacturing PMI numbers from US, Euro zone and UK. Better-than-expected economic data could boost gains for the dollar, according to experts. In the previous session, the rupee closed at its all-time low against the US currency as a rise in US bond yields reduced the appeal of riskier assets. Fall in domestic equities, higher crude oil prices and foreign currency outflows also weighed on the rupee. In the interbank forex market, the local unit opened at 77.65 against the greenback and finally closed at 77.71, down 17 paise over its previous close.

Anindya Banerjee, VP, Currency Derivatives & Interest Rate Derivatives, Kotak Securities Ltd.

“USDINR closed 10 paise higher at 77.64 level. Weakness in stocks, an increase in oil prices and the strengthening of the US dollar index pushed the pair higher. In the near term, USDINR may trade with an upward bias. Range 77.40 and 78 are expected to remain spot on.

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

“The rupee continued to trade in a narrow range but fell slightly ahead of the significant GDP numbers released on the domestic front. India’s GDP grew by 4.0% in the January-March quarter compared to a year ago. The near-term prospects of the economy have been darkened by a pick-up in retail inflation, which hit an eight-year high of 7.8% in April. At the same time, the fiscal deficit stood at 6.71% as compared to 6.9% of GDP. The government has projected a higher fiscal deficit of 6.9% of GDP in the revised estimates in the Budget for 2022-23.

“The reaction on the rupee is muted and this week’s global numbers are likely to impact the currency. The dollar recovered from its intraday low ahead of the meeting between the US President and the Fed chairman. The recovery in the greenback has also been driven by better-than-expected consumer confidence numbers from the US. Today the focus will be on manufacturing PMI numbers from US, Euro zone and UK. Better-than-expected economic data could propel gains for the dollar. We expect USDINR (Spot) to trade sideways and place a bid in the range of 77.05 and 77.80.

Amit Pabri, MD, CR Forex Advisors

“For now, the equities and FX markets are in a consolidation zone, with the dollar index unlikely to see any significant gains unless some new risk emerges. Oil prices were up significantly yesterday, Which witnessed some cooling overnight while risk sentiment is slightly positive on significant opening of China activity. Today USDINR is likely to open close to 77.57 and trade in range of 77.30 -77.80. On the domestic front, India Growth concerns are in focus as the country’s GDP is at 4.1% growth in Q4 FY22.”

“Rising oil prices, slowdown in global growth and rising interest rate cycles are all creating headwinds for the economy. it’s a difficult task for reserve Bank of India And the government both actively to manage it well. The central bank has so far effectively used its reserves of $650 billion and depreciated the rupee to over 77.85 to avoid any impact on the economy. However, improving risk appetite and the recent weak US dollar index may provide some respite to continued central bank intervention. All the above factors indicate near term growth in rupee towards 76.80 -77.10.

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