The Indian rupee is expected to remain sideways on Friday amid falling crude prices, risk aversion in global equity markets, and a strong dollar. The USDINR pair is having resistance at 79.90 and 80.15, while the support has shifted to 79.40 from 79.05, according to analysts. In the previous session, the rupee declined due to strong demand for the U.S. dollar from oil companies, while markets braced for a big rate hike from the U.S. Federal Reserve next week. A firm American currency and a negative trend in domestic equities weighed on the currency. At the interbank foreign exchange market, the local unit opened at 79.53 per dollar, and settled at 79.73, down 21 paise over its previous close.
Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services
“Rupee on Thursday consolidated in a narrow a range and volatility remained low even after inflation number from the US and the UK came above estimates. The dollar was slightly higher following data showing U.S. retail sales unexpectedly rebounded in August. But gains for the dollar were restricted as data for July was revised downward to show retail sales declining instead of flat as previously reported. The greenback has been supported by the view that the Fed will keep tightening policy aggressively.”
“Yen was under pressure after a record Japanese trade deficit for August. The yen’s fall by nearly 20% over the past six months added to higher import costs, aggravating already high costs of energy and raw materials. The market remains choppy knowing that there’s a Fed meeting next week. Even though market participants agree that there could be a 75 basis points rate hike, it’s what the statement adds to previous commentary and what Chairman Powell says in his press conference. We expect the USDINR(Spot) to trade sideways and quote in the range of 79.40 and 80.05.”
Dilip Parmar, Research Analyst, HDFC Securities
“The Indian Rupee could fall lower following a weak handover from overseas. Overnight, we have seen risk-averse moods after mix bag of US economic data that backed the view of hawkish monetary policy. US Swaps traders are currently pricing in a 75 basis-point hike when the Fed meets next week. The weakness in the Chinese yuan which crosses the 7 could also weigh on other regional currencies.”
“Asian stocks headed for the fifth week of declines following more weakness in US equities and a surge in short-end Treasury yields that reflects expectations for outsized Federal Reserve interest rate hikes. On Thursday, spot USDINR gained 26 paise to 0.33% to 79.79 and heads for the first weekly gain after two weeks of fall. The technical set-up turned bullish after the past two days of price action. The pair is having resistance at 79.90 and 80.15 while the support has been shifted to 79.40 from 79.05.”
Amit Pabari, MD, CR Forex Advisors
“Inflation in the US and its strong consumer and labor markets are backing the Fed’s aggressive rate hike decision in the upcoming policy meeting on 21st September. Markets have priced in fully the chance of an increase of 0.75 bps while the 30% see an increase of 1 full percentage rate hike as of today, all of which is supporting the strength in the US dollar and shot the US 10Y yields to a 52-week high yesterday. Here, the recent sharp appreciation in rupee near 79.00 levels has been quickly washed off for it to trade again back to near 79.80 levels.”
“It could be the influence of the strong dollar, weaker sentiments, or weakening of the Chinese Yuan past 7.00 all negative factors weighing on the rupee. The next move toward 79.95 and 80.10 is basically the RBI’s play as one needs to be cautious of the central bank intervention from the past two times. For now, the level of 80.10 remains a strong resistance for the USDINR pair, which hasn’t been able to breach multiple times in the past though however posed the rest of the currencies are. Breaking 80.10 could invite another upside move of 50 paise to 1 rupee. On the flip side, 79.00 remains strong support for the pair.”
Eqwires Research Analyst
Top-notch SEBI registered research analyst
Best SEBI registered Intraday tips provider
Call: +91 9624421555 / +91 9624461555