Rupee starts off stronger and could gain more due to the US dollar’s depreciation and the equities markets’ risk-on attitude.

On Monday, the Indian rupee began trading at 80.94 to the dollar, up 18 paise from the previous close of 81.12 to the dollar. For the first time since the start of 2022, the local unit is below the 81-point threshold. On the strength of increased risk appetite in the home market, a weaker dollar, and a fall in crude oil prices, the rupee is anticipated to strengthen versus the dollar. The worse set of economic data and lowering inflation in the US may compel the Fed to scale down its aggressive rate raise agenda, causing the dollar to stay volatile. In accordance with ICICIdirect, “US$INR has breached the 100-day EMA level at 81.48 and is projected to fall towards the next support at 80.80, followed by 80.60.”

The Indian Rupee is anticipated to follow the flow narrative and movement in the US dollar over a condensed week that includes both a Chinese Lunar holiday on January 26 and a holiday for India’s Republic Day on that same day. “FDI inflows are supporting the inclination toward appreciation, if not FII. To reduce the excessive gain or volatility, the RBI could intervene in the market through PSUs. According to newly disclosed data, RBI’s FX Reserve purse increased by $10.417 billion to $572 billion for the week ending January 13, when the rupee suddenly strengthened from 82.90 to 81.50, marking the largest weekly increase in recent memory. The first-ever sovereign green bond offering by India will be the main topic, according to MD Amit Pabari. CR Forex Advisors.

“On Wednesday, the RBI will hold an auction for 5 and 10-year green bonds totaling Rs 40 billion apiece. Overall, the appreciation may continue toward 80.80 to 80.50, but the RBI will be on guard at that point. 81.50 to 81.80 will serve as a significant obstacle on the higher side. Weaker US economic statistics and a declining likelihood of a smaller rate move beyond the Fed are weighing on the USD, pushing the US dollar index close to its 7-month low. The emphasis this week will be on Thursday’s US advance GDP, Friday’s PCE statistics, and tomorrow’s flash PMIs, Pabari continued.

“Last week, we identified the area between 81.4 and 81.50 as a pullback from which another leg downaiming 80.9 would develop. This is the action we’ll try to take today, and we’ll be ready to see 80.4 as well. Anand James, Chief Market Strategist at Geojit Financial Services, suggests that a pullback over 80.12 would trigger short covering.

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