The volatility in the global equity markets, the stability of oil prices at $95 per barrel, and the strength of the dollar, the Indian Rupee is likely to remain stable. On Friday, the USDINR pair opened a little higher and is forecast to move in a range of 82.50 and 83.30. Following the US Federal Reserve’s decision to raise interest rates and retain a hawkish posture, the rupee lost value against the US dollar in the previous session.
The local currency at the interbank foreign exchange market started the day at Rs. 82.87 and dropped throughout the day before settling at Rs. 82.90 versus the dollar, down 10 paise from its previous close. The dollar index, which measures the strength of the dollar against a basket of six different currencies, increased by 1.39% to 112.89.
“Even after the FOMC policy statement that was delivered this week, the rupee continued to consolidate in a narrow range. Although the Fed increased interest rates by 75 basis points, as expected, the dollar recovered some of its strength after Federal Reserve Chair Jerome Powell said it was premature to talk about pausing its rate hikes to combat rising consumer prices because there is “no sense that inflation is coming down.” He further stated that the Fed’s upcoming meeting in December could see a change in the rate of rate increases.
“After the FED policy was released, the FED chair’s major goal was to move participants’ focus away from how quickly rates are rising and toward where rates must be and how long they must remain there. The final rate, according to him, will be higher than the 4.50–4.75 that the Fed had predicted back in September. Most traders and participants viewed this delivery as optimistic, and as a result, the US 10-year bond rates quickly rose beyond the 4.20% level. We experienced again another slow day for the USDINR pair, which closed above the 83.00 level and protected the 82.80 level for the third straight session. The fact that the level is 82.80 level is held so strongly, says that there is a lot of upward push on the pair.” said, Anindya Banerjee, VP, of Currency Derivatives & Interest Rate Derivatives at Kotak Securities