With the strength of the dollar, the Indian rupee is likely to weaken. Increased petroleum prices, worries about interest rate increases, and recession worries are also anticipated to have an impact on the local currency. Analysts predict that the USDINR spot price will fluctuate between Rs. 79 and Rs. 80.50 over the next several trading days. The rupee lost ground versus the US dollar in the previous session as a result of a strong foreign currency and falling domestic stock prices. The rupee started out at Rs. 79.93 per dollar on the interbank foreign exchange market and ended the day at Rs. 79.89, down 7 paise from its previous finish.
“Today’s weak tone in the domestic markets and a strong Dollar led to a 0.12% decline in the value of the Indian rupee. US economic data startled the markets, which led to a gain in the US dollar. Despite projections for a decrease to 55.4, the US ISM services PMI surprisingly increased to 56.9 in August from 56.7 in July. The Federal Reserve is expected to raise rates by 75 basis points at its FOMC meeting later this month as a result of this. The downside was mitigated by low crude oil prices and FII inflows, though, Said Anuj Choudhary – Research Analyst.
“We anticipate that the rupee will continue weak due to the strong US dollar and negative global market indications. The dollar index has recently climbed to a new 20-year high and is presently trading at about 110.45. The rupee may also be hampered by a rise in crude oil prices from their recent lows. Inflows from FIIs could sustain the rupee at lower levels, though. Markets may also be influenced by the US trade deficit, which is anticipated to be better than it was last month. The USDINR current price is anticipated to fluctuate between Rs 79 and Rs 80.50 over the next sessions”, he added
“Despite instability in major crosses and the dollar rising to its greatest level in 20 years, the rupee continued to move in a limited range. Domestically, attention will now turn to the inflation and industrial output figures that will be announced the following week. This trend suggests that trade may continue to contribute to GDP in the third quarter. Exports of goods and services increased 0.2% to $259.3 billion, while the trade deficit decreased 12.6% to $70.6 billion” Said, Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services