The Indian rupee is likely to remain marginalized on Tuesday amid volatility in domestic and global equities. FPI outflow, lack of carry trade bets could drag the rupee down. According to Forex analysts, the short-term range for the USDINR pair could be between 76.80 and 78.00. In the previous session, the rupee recovered from a record low and stabilized high against the US dollar, supported by a weak greenback abroad. In the interbank Forex market, the domestic unit opened at 77.69 against the greenback, moving from 77.51 to 77.69 during the session, before closing its three-session losing streak at 77.55, registering a 15 paise increase compared to the previous close.
Gourang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services
“Despite instability in domestic and global equities, the rupee has continued to trade in a narrow range for the past few sessions. On the internal front, the lack of signal also keeps the currency moving low. This week, on the internal front, there is no big indication and further impact on the rupee could be felt as the dollar has moved against its main cross. The euro rose sharply against the US dollar yesterday after the European Central Bank signaled it would move away from negative interest rates.
ECB President Christine Lagarde said in a blog post that the bank would lift its eurozone deposit rate from negative territory by the end of September and could raise it further if inflation stabilizes at 2%. However he acknowledged that their numbers were not enough to defeat Trump’s government. Today, the focus will be on initial manufacturing PMI numbers from the United States, the euro zone and the United Kingdom. At the same time, the statements of the Fed Chairman and the ECB President will be closely watched. We expect USDINR (Spot) to trade sideways and quote between 77.05 and 77.80. “
Anindya Banerjee, VP, Currency Derivatives and Interest Rate Derivatives in Kotak Securities
“A softer dollar index, improved global risk aversion and a stronger Chinese yuan have all worked together to bring down the USDINR, but managed only a 13 paise drop. The Indian rupee continues to have a low-performance and as a result it is unable to participate in short covering rallies on other currencies. Lack of FPI outflow and carry trade bets is the reason for the rupee to pull down. In the near term, we expect USDINR to remain between 77.30 and 78.00 levels. Alternative vendors continue to do well as historically perceived volatility is the underlying volatility of undershoot options. “
Amit Pabari, MD, CR Forex Advisor
“This is the third time that the USDINR pair has resisted near the 77.70-77.80 zone and returned to the 77.50 level. Yesterday’s move was partially observed after the RBI governor’s positive comments on interest rates, inflation, liquidity, and economic activity, and a sharp correction in the US dollar index has further weakened the pair. Today, the Indian rupee is expected to open near 77.55 and will probably trade in the 77.35 to 77.75 zone. The USD weakened as FOMC members offered hockey tones and their counterparts, the euro and the pound, gained traction. Today, the focus will be on flash production PMI from key regions and the speeches of Powell and Lagarde. “
“Local equities have come under pressure again on the positive news of reduction of excise duty on petrol / diesel by the central government, increase in fertilizer / gas cylinders and increase in export duty on 11 iron and steel items. By 15%. Big Daddy- FII sold around Rs. 30,000 crore stocks and bonds from the Indian market. Other factors affecting the rupee, such as US yields and crude oil prices, may be the initial indications of a currently quiet but impending higher volatility. The RBI’s sell-off trend, exporter congestion and slight FDI inflows are helping the rupee stay close to the 77.50 mark. Thus, the short-term range for this pair could be between 76.80 and 78.00. “
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