The India Rupee is likely to open higher and trade sideways on Friday. If US Dollar continues to rise in global markets, RBI may allow the USDINR pair to drift towards 77.50/78.00 range, still well within the stable levels. In the previous session, the rupee pared initial losses to settle higher against the US dollar, tracking positive domestic equities. The appreciation bias in the local unit is likely to be capped in the near term amid strong American currency, inflationary concerns and fears about an aggressive pace of the U.S. rate hikes, according to analysts. At the interbank forex market, the rupee opened at 76.60 against the greenback and moved in a range of 76.43 to 76.71 before finally settling at 76.53, 4 paise higher from its previous close of 76.57.
Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services
“Rupee fell in the first half of the session but rose in the latter half despite sharp gains in the dollar against its major crosses. In the last few sessions dollar has been on the rise on expectation that the Federal Reserve in its upcoming policy meeting would be adopting to more aggressive stance. Market participants remained cautious also ahead of the advance GDP number that was released from the US. Data showed the U.S. economy unexpectedly contracted in the first quarter amid a resurgence in COVID-19 cases and drop in pandemic relief money from the government.Today, focus will be on the preliminary inflation number that will be released from the Euro zone and core PCE index number from the US. We expect the USDINR(Spot) to trade sideways and quote in the range of 76.20 and 76.80.”
Amit Pabari, MD, CR Forex Advisors
“The Indian Rupee is expected to open again near 76.60, ignoring all the facts and weaker fundamentals to trade in a tight range of 76.40 to 76.80 zone. The compression of momentum suggests an upcoming wild move on either side. Thus, one should remain cautious and well placed. As the month is near its end, oil is poised to post a fifth monthly advance, and the bond market is set to have the worst month since the burst of rate hikes in 1990. In the equity market, tech leader- Nasdaq is already down by more than 20% this year. Commodities are the only outliers. So, inflation is into its Bull run and the growth is doubtful. A certain next week’s 50 bps Fed hike and aggression from Russia for an energy stoppage to EU could support the ‘Sell in May and go away’ story again. Domestically, LIC IPO and other FDI-related flows could turn the story upside down. Meantime, the short-term range is pegged between 75.70 to 77.00.”
Anindya Banerjee, VP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities
One more day of flat closing in USDINR. Combination of central bank intervention and capital flows is keeping USDINR capped, inspite of a relentless rise in the US Dollar Index. YTD USDINR has appreciated by a little over 2.5%, just under median increase of around 4% for major currencies. Therefore, Rupee has done well on average but not by a large margin. Therefore, RBI has been successful in keeping the Rupee stable. One can argue that if US Dollar continues to rise in global markets, then RBI may allow the pair to drift towards 77.50/78.00 range, still well within the stable levels. Rangebound price action is music to the ears of option sellers. However, at the same time, also keep some long ratio call spreads in your portfolio. If the above adjustment occurs during the month of May, those trade can deliver decent returns.”
Tapish Pandey, Research Analyst, SMC Global Securities
“The Indian Rupee likely to trade on a flattish note where Indian rupee is also getting strength on back of several IPO flows expectation indicating much-awaited Rs 21,000 crore mega LIC IPO. Dollar rupee is consolidating in range of 76.42 to 77.09 levels from last few trading sessions which are going to act as immediate support and resistance respectively. However, overall trend for USDINR is still bullish as it holds above it key moving averages. On down side below range next support is placed around 76.11 levels while on higher side, if it sustains above 77.09, USDINR will resume it upwards rally in near future. For now, we are looking USDINR to trade in the same range for coming session and also there will be mixed direction as both dollar and rupee have positive strength.”
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