Experts see Rupee trading in the range of 83-84 against US Dollar in Q1FY25

The Indian rupee is likely to be in the range of 83-84 against the US dollar weighed by geo-political tensions between Iran and Israel, and a rise in global crude oil prices, at least four experts Moneycontrol spoke to said on April 16.

"Expecting the rupee to consolidate between 82.50 and 84 range," said Dilip Parmar, a foreign exchange analyst at HDFC Securities.

Kunal Sodhani, Vice President at Shinhan Bank added that tensions in the middle east and the ongoing Ukraine-Russia war is adding to the risk on-risk off scenarios. Market participants will also be tracking the interest rate trajectory by the US Federal Reserve and the Eurozone area this quarter.

Earlier today, Indian rupee slipped to a lifetime low of 83.5350 against the US dollar.

You can track all the currency market action right here on Moneycontrol.

On April 13, Iran fired over 300 drones and missiles at Israel, in retaliation to a strike on its consulate in Syria, allegedly by Israel, earlier in the month. Tel Aviv said it would respond and "extract the price from Iran”, urging for tighter sanctions against Tehran.

Since Iran's attack on Israel, crude oil prices have risen by 1 percent to above $90 per barrel mark, driven by concerns over potential supply disruptions.

"This and Middle East tensions are causing the upmove in $ INR with RBI giving some comfort by selling dollars while FPIs are buyers taking money out of the country deploying it in the US. Broadly, a range of 83.25 to 84.00 is expected with expectations on the upside," said Anil Kumar Bhansali, head of Treasury and Executive Director of Finrex Treasury Advisory.

RBI intervention

Money market experts said the Reserve Bank of India (RBI) is likely to intervene in the market to curb the volatility.

"RBI may continue to curb the volatility. We expect many other Asian central banks will also safe guard their local currency by intervening," Parmar added.

Sodhani said the central bank use the reserves as an ammunition to curtail excessive volatility.

Currently, India's forex reserves jumped by USD 2.98 billion to a fresh peak of USD 648.562 billion for the week ended April 5, the RBI said on Friday. In the previous reporting week, the forex kitty had increased by USD 2.951 billion to USD 645.583 billion, which was an all-time high. In the previous reporting week, the forex kitty had increased by USD 2.951 billion to USD 645.583 billion, which was an all-time high.

In September 2021, the country’s forex kitty reached an all-time high of USD 642.453 billion, a level that was breached in March this year. The reserves took a hit as the central bank deployed the reserves to defend the rupee amid pressures caused majorly by global events, but there has been a steady accretion over the past few months.

"RBI intervention remains focused on limiting two-way volatility in USDINR and we expect this to continue.  FX reserves remain adequate with an import cover of  11.6 months (spot reserves plus forward book).  Compared to other currencies, INR has weakened by lesser extent against the dollar in CY2024," said Gaura Sen Gupta, Economist, IDFC First Bank.