The Indian rupee appreciated 9 paise to 82.69 against the US dollar in early trade as crude oil prices retreated from their elevated levels. Sustained foreign fund outflows weighed on investor sentiments and restricted the appreciation bias. At the interbank foreign exchange, the local unit opened at 82.69 against the dollar, registering a rise of 9 paise over its previous close. Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.03% to 103.55.
“Rupee is likely to appreciate today mainly on the back of weakness in the dollar and optimistic domestic market sentiments. Additionally, improved economic data in India will continue to support the domestic currency. However, a surge in crude oil prices and ongoing concern’s about a global economic slowdown will hurt the rupee. US$INR (January) is facing strong resistance near 83.10 levels. As long as it sustains below this level it may slip back to 82.70 levels,” said ICICIdirect in its report.
US Jobs data may trigger volatility
“Market participants will keep an eye on Manufacturing PMI from the UK and US. In the previous session, PMI number on the domestic front was released, which were reported better than expectations suggesting that manufacturing activity is picking up. Higher inflation and uncertainty over the COVID-19 pandemic are further weighing on growth, hence along with the economic data points, updates from governors of major central bankers will be important to keep an eye on, going forward. Focus this week will also be on the US Jobs market data which could trigger volatility in the market. We expect the USDINR (Spot) to trade sideways and quote in the range of 82.40-83.20,” said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.
The rupee may break out of the three-week range
“Upside attempts looked resolute yesterday and we are bracing for a break of 82.84/ 88 region that could potentially open room for 83.25 views. But, as yesterday, we would begin the day inside the consolidation band of 82.75 – 82.59,” said Anand James – Chief Market Strategist at Geojit Financial Services.
“Spot USDINR is still in a three-week range of 82.50 to 82.95. We believe the said range could be resolved by the weekend as liquidity returns with traders returning to their desks after the New year holiday,” said Dilip Parmar, Research Analyst, at HDFC Securities.
Rupee to become stronger
“India’s manufacturing PMI rose to a 26-month high of 57.8 in December, marking the highest increase in new factory orders and production in more than two years. This indicates the underlying strength and resilience of the economy that can make India a favored destination for FII’s in 2023, thereby helping a stronger rupee. Globally too with a stronger Yuan, Japanese yen, and other majors, Rupee is more likely to follow the league though in lag. Though the rupee’s bias is fundamentally on the stronger side, given the divergence, it’s advisable for the exporters to follow the hedge ratio and importers to keep capturing intraday dips for near-term payments instead of hunting for levels,” said Amit Pabari, MD, CR Forex Advisors.
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