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Rupee likely to depreciate on strong dollar, FII outflows; USDINR pair to trade in this range

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The Indian Rupee is likely to depreciate on Thursday amid strong dollar, risk aversion in global markets. Persistent FII outflows are also expected to weigh in the domestic currency. USDINR may continue to be range bound between 76.80 and 77.70 levels on spot, due to RBI intervention and IPO related FPI flows.

The Indian Rupee is likely to depreciate on Thursday amid strong dollar, risk aversion in global markets. Persistent FII outflows are also expected to weigh in the domestic currency. USDINR may continue to be range bound between 76.80 and 77.70 levels on spot, due to RBI intervention and IPO related FPI flows, according to analysts. The rupee appreciated further against the US dollar in the previous session as the American currency retreated from its 20-year high levels. At the interbank forex market, the domestic unit opened at 77.24 against the greenback and moved in a range of 77.17 to 77.31 during the day trade before finally settling at 77.24, registering a rise of 10 paise over its previous close.

Anindya Banerjee, VP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities

“USDINR spot closed 9 paise lower at 77.25 levels. With most currencies trading flat ahead of important US inflation data tonight, USDINR too remained rangebound. Over the near term, USDINR may continue to be range bound between 76.80 and 77.70 levels on spot, due to RBI intervention and IPO related FPI flows.”

Praveen Singh- AVP, Fundamental currencies and Commodities Analyst, Sharekhan by BNP Paribhas

“Yesterday, the Indian rupee was see-sawing between gains and losses as the US 10-year yields have pulled back below 3% mark. Risk sentiments are positive as China registered fewer Covid cases. There are reports of RBI intervention in the futures markets, too. Decline in crude oil prices over the past couple of sessions has also lent support to Rupee at lower levels. Dollar eased from higher levels on positive Asian and European markets and a decline in US Treasury yields. However, risk aversion in domestic markets and sustained FII outflows are capping sharp gains in the domestic currency.”

“FIIs remained net sellers for the seventh consecutive session on Tuesday and sold assets worth about Rs. 3960 crores. Net FII outflows in the month of May stands at Rs 20,055 crore. The domestic currency is expected to trade sideways to lower on sustained FII outflows amid hawkish US Federal Reserve and concerns over global economic slowdown, though recent decline in crude oil prices and further intervention by the RBI may support Rupee at lower levels. Rupee may trade in the range of 76.50-78.20 in next couple of sessions.”

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

“Rupee traded in a narrow range after falling to fresh all-time lows earlier this week, On the domestic front, market participants remained cautious ahead of the important inflation number that will be released today. Expectation is that the number could come in higher and quote above the 7% mark following rise in food and energy prices. Apart from inflation, industrial production number too will be released and is likely to influence the rupee. Yesterday, the dollar continued to rally against its major crosses after the US CPI for April came in at 8.3%, higher than the 8.1% estimate but below 8.5% the prior month.”

“President Joe Biden again acknowledged the pain inflation was inflicting on American families and reiterated that bringing prices down “is my top economic priority.” Today, from the US PPI number will be the only important data to watch for. Major crosses Euro and pound came under pressure and in today’s session are likely to take cues from the UK GDP number. Weaker-than-expected economic data could keep the currency weighed down. For today, we expect USDINR(Spot) to trade sideways with a positive bias and quote in the range of 77.20 and 77.80.”

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