Wednesday’s opening rate for the Indian rupee was higher than yesterday’s close of 81.72, at 81.64 to the dollar. As domestic equities markets do well, Asian counterparts perform well, and the dollar weakens, the local currency is anticipated to rise. The rupee lost ground versus the US dollar in the previous session as the outlook for the forex market was negatively impacted by rising crude oil prices on the global market.
The local unit’s losses were, nevertheless, limited by a strong trend in domestic equities and a weak American dollar abroad. The local unit at the interbank foreign exchange market started out strongly at 81.58 but ended the day at 81.71, declining 3 paise from its previous close of 81.68.
“The rupee is expected to trade between 81.40 and 81.80 levels. Due to mixed investor mood during the past seven trading days, the USDINR pair has been trading in a narrow range. It has been noticed that whenever consolidation occurs, there is a move of 1–1.50 rupees on either side of a breakout. FII continued to pour money into local shares, while Chinese yuan continued to depreciate at a quicker rate due to rising social discontent, leaving investors torn between being bullish or negative.
Due to domestic indices outperforming global indices and improved macroeconomic and political stability, which makes India a preferred destination for FII inflows as seen by 32,000 crores of flows thus far, the breakout in USDINR below 81.40 seems more possible. Overall, risk-on sentiment in EM currencies may cause the pair to go toward levels near 81.20. In the near future, any upswing around 81.80-82.00 should be a good time to sell.