Rupee rises on strong global cues; oil prices fall; USDINR pair trades in this range.

On Thursday, the Indian Rupee began the day 15 paise higher at 81.70 to the dollar. The local currency is anticipated to strengthen against the US dollar due to strong global cues, increased equities market risk, and other factors. The USDINR pair is anticipated to trade flatly with a bias against it. Due to importers’ demand for the US dollar and a rise in crude oil prices, the rupee lost value in the previous session. Investor mood was also affected by ongoing outflows of foreign funds and worries over an increase in COVID-19 cases in China. The local currency at the interbank foreign exchange market fell 18 pence from its previous close, from an opening price of 81.81 to a closing price of 81.85 against the US dollar.

“Due to importers’ desire for dollars and a rise in crude oil prices, the Indian Rupee depreciated by 0.19% on the open market. The rupee was also hurt by FII inflows. The weak US dollar and the robust domestic markets, however, limited the negative effects. Due to worries over the increase in COVID-19 cases in China and hawkish Fed remarks, we anticipate the rupee to trade with a bias against it.

The US central bank will not suspend its rate hike, despite some Fed officials’ hints that they are open to a slower pace. Traders may glean insights from statistics on new home sales, durable goods orders, and PMI for manufacturing and services. In anticipation of the FOMC meeting minutes later today, traders might exercise caution. The predicted range for the USDINR spot price is Rs. 81.20 to Rs.81.80

The dollar increased in the last hour of trading as traders awaited the release of yesterday’s FOMC meeting minutes, which put pressure on the rupee. According to the minutes, Federal Reserve officials expressed concern about the potential effects of rate rises on the economy and financial stability as well as their expectation to convert to lower interest rate hikes “soon.” Some committee members, though, expressed worry about threats to the financial system if the Fed kept moving forward at its current brisk rate. In yesterday’s session, major crosses increased as a result of a less aggressive Fed stance, Said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.

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