The Indian rupee is expected to appreciate on Monday amid a rise in risk appetite in domestic markets and easing of crude oil prices. The local unit 10 paise against the US dollar in previous session after the Reserve Bank of India maintained status quo on the benchmark lending rate and RBI Governor Shaktikanta Das said the Indian economy has large forex reserves and that it stands ready and resolute to defend the economy. The domestic currency opened at 75.99 against the US dollar and touched an intra-day high of 75.70 before settling at at 75.93, registering a rise of 10 paise over its previous close.
Praveen Singh, AVP- Fundamental currencies and Commodities analyst, Sharekhan
“Indian rupee was slightly weaker today on weak equity markets, and stronger US Dollar, even though weaker crude oil cushioned the downside. The domestic currency is expected to trade sideways to lower in near-term amid geopolitical tensions in Eastern Europe. Dollar may strengthen as FOMC minutes showed that Fed officials are hawkish and prefer hiking rates by 0.50% and trimming their balance sheet by ~$95 billion per month from May. However, traders may remain cautious ahead of RBI monetary policy. Unchanged policy may weaken Rupee further while a hike in rates may support the domestic currency to some extent. Rupee may trade in the range of 75.25-76.50 in near-term.”
Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services
“Rupee consolidated in a broad range ahead of the important FOMC meeting minutes and the RBI policy statement that was released at the end of the week. FOMC meeting minutes showed policymakers rallying around plans to cut the central bank’s massive balance sheet as soon as next month. On the domestic front, volatility increased after the RBI held rates unchanged. Volatility of the currency has been curtailed also as RBI continued to intervene. This week is a relatively shorter week but market participants will be keeping an eye on the inflation and industrial production number to gauge a view for the currency. Expectation is that inflation could remain elevated following the recent rise in energy and food prices. On the other hand, industrial production could grow at a slower pace in January and could further weigh on the currency. We expect the momentum for the USDINR would continue to remain sideways with a positive bias and could quote in the range of 75.50 and 76.20.”
Kshitij Purohit, Lead Commodity & Currency at CapitalVia Global Research
“In early trading on Friday, the rupee rose 23 paise to 75.80 against the US dollar, as the Reserve Bank of India kept the benchmark lending rate unchanged. The dollar index, which measures the strength of the greenback against a basket of six currencies, increased 0.13% to 99.87. The dollar pushed higher on Friday, hitting a fresh near-two-year high against a basket of peers and a one-month high against the euro, boosted by expectations of a faster pace of Federal Reserve interest rate hikes. As markets settle on the concept of a much more aggressive Federal Reserve in Q2, recent advances in the dollar index appear to be reasonably sustainable for the rest of the month. However, we believe that further dollar gains are improbable without a market-based re-calibration of the Fed’s terminal rate. This is partly due to the Fed’s current pricing having limited upside based on existing fundamentals.”
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