The rupiah is expected to depreciate further on the strength of the US dollar, the high price of crude and the continued outflows of FII

The Indian rupee is expected to depreciate on Thursday amid a strong dollar. In addition, weak domestic markets, rising crude oil prices and continued foreign capital outflows may also weigh on the local unit. Looking ahead, the spot rupee may weaken towards new all-time lows amid weak fundamentals. On Wednesday, the Rupee settled at 77.74, slightly weaker from its previous close of 77.71, to hit a new all-time closing low against the US Dollar. The national currency traded in a tight range amid sustained foreign capital outflows and high global crude oil prices. The previous high close was on May 19, when it ended at 77.73 against the greenback.

Anindya Banerjee, Vice President, Currency and Interest Rate Derivatives at Kotak Securities

“USDINR spot closed 2 paise higher at 77.73 levels. RBI policy was non-event. RBI should continue to raise rates in upcoming meetings as inflation may remain above its target for for the full year. USDINR may continue to show low volatility. A range of 77.40 to 78.00 remains in play in the near term.”

Jigar Trivedi, Research Analyst – Commodities and Currencies, Fundamentals, Stocks and Anand Rathi’s Stockbrokers

India’s central bank raised key repo rates by 50 basis points to 4.9%, up for the second month in a row and joined the league of central banks which raised rates by half a percentage point. point in order to rein in soaring inflation.Meanwhile, RBI telegraphed the withdrawal of accommodation in the future and raised the inflation forecast to 6.7% for FY23. Rate hikes don’t help inflation much on the supply side, they could cool demand Going forward, we could see the Rupee spot weakening towards new all-time lows amid Weak fundamentals High crude oil prices, rebounding dollar index and continued FII outflows ahead of the FOMC meeting could cause the rupee to gradually depreciate towards the 78.2 levels.

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“The Rupee is expected to depreciate today amid a strong Dollar. Additionally, it may come under pressure from weak domestic markets, rising crude oil prices and continued foreign capital outflows. The US Dollar INR is expected to trade higher towards its key resistance level at 77.95 and trade within the 77.75-77.95 range.

Amit Pabari, MD, CR Forex Advisors

“In immediate response to the RBI policy announcement, bond yields rose from 7.50% to 7.54%, then stabilized at 7.45%, equities turned volatile and FIIs were selling; however, the USDINR remained in a compressed 12 paise range.Surprisingly, the bond markets were more volatile than the Rupee which remained cold across the board.This signifies the heavy selling pressure from RBI which subdued market forces and kept the pair well below 77.80 levels The sword is still hooked on the rupee amid continued selling by emerging market FIIs, leading to weaker Asian currencies, a rising oil prices and inflationary pressure revised upwards for the next few quarters, however, the only silver lining for the rupiah currently remains RBI which has been actively and aggressively involved in shielding the rupiah from the heat so far. As long as the The pair is trading below the 77.80 levels, there is still hope for the 77.40-77.50 levels.

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

“Reaction on the rupiah remained subdued even after the RBI’s policy statement in which the central bank hiked rates by 50bps and abandoned its ‘dovish’ stance, signaling tighter tightening ahead to fight back. against soaring inflation The RBI Governor mentioned in his statement that the upside risks to inflation as highlighted in recent policy meetings have materialized sooner than expected. inflation suggests to us that the MPC will continue to accelerate policy tightening over the coming months.

“On the flip side, the dollar has resumed its bullish trajectory following safe haven buying ahead of the ECB’s policy statement due today and the US CPI number to be released tomorrow. The ECB is likely to take a hawkish stance and investors are also discounting with interest rate hikes starting in July.We expect USDINR (Spot) to trade with a positive bias and quote in the 77 range, 40 and 78.20.

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Richard L. Militello