On Monday, the rupee opened about 60 paise down at 82.41 per dollar as the dollar’s value increased versus a basket of six peers and against international crude oil benchmarks. At the interbank foreign exchange, the local unit started out weakly versus the dollar at 82.35 before dropping to 82.50 and losing 42 paise from its previous level.
The rupee’s last session closing price versus the US dollar was 82.08. At 102.9, the dollar index was trading 0.2% higher. As risk appetite in the equity markets increases, the rupee is anticipated to appreciate. Meanwhile, the strong dollar and ongoing FII withdrawals could limit any significant gain. Additionally, investors will now closely watch RBI’s monetary policy scheduled on February 8, where the central bank may hike rates by 25 bps.
According to ICICIdirect, “The US$INR is likely to breach the crucial support level of 81.85 to continue trading towards the level of 81.75.” Inflows of FDI and the position of the RBI may act as the rupee’s supporters. FPIs and a stronger USD, however, might pressurise the same.
The RBI policy can serve as a deciding factor in a tie. According to Amit Pabari, MD of CR Forex Advisors, “overall, we anticipate that the pair should encounter firm resistance near 82.40-50 levels, and additionally RBI could also interfere around those levels; which could make a reversal towards 81.50-81.30 levels again.”