The Indian rupee is projected to fall further as the dollar strengthens and markets become more risk-averse. The USDINR pair is likely to rise to 83 in the next sessions. The rupee fell to a new record low of 81.94 against the US dollar in the previous session, as US bond yields rose. So far in the calendar year 2022, the native currency has depreciated by roughly 9% against the US dollar.
“The Indian rupee may open higher, taking cues from stronger regional peers and overnight weakness in the dollar index as US government yields fall.” The recovery in risk assets benefits the local unit as well. On Wednesday, the spot USDINR closed at 81.94, having reached an intraday high of 81.96. On the daily chart, the pair has been considerably overbought, indicating a need for near-term correction and profit taking. The pair has 81.10 as support and 82 as resistance.”
“The rupee plummeted to new all-time lows yesterday but traded in a confined range as market participants remained cautious following recent central bank action and as UK government budget measures continued to roil markets.” The Bank of England said it got £2.587 billion in offers in its first bond repurchase operation targeted at market stabilization, but accepted only £1.025 billion. The central bank had pledged to purchase as many long-term government bonds, known as gilts, as were required between September 28th and October 14th.”
“The relief for sterling may be temporary, as the UK continues to grapple with macro trends such as high inflation.” Domestically, the attention will be on the RBI policy statement, with expectations that the central bank will continue to raise rates while maintaining a hawkish tone. The rupee will take signals from the central bank’s future position on rates, growth, and inflation. Today, the attention will be on the final GDP report from the United States; better-than-expected data might extend the dollar’s gains. The USDINR(Spot) is expected to move sideways and quote between 81.20 and 81.80.”
