The Indian rupee is anticipated to continue volatile in the face of a strong dollar, market risk aversion, and cautious emotions ahead of the result of the RBI Monetary Policy Committee meeting. The rupee closed slightly higher versus the US dollar the previous day, following a bumpy session in which the Reserve Bank of India presumably sold dollars to strengthen the local currency. The rupee finished at 81.86 per dollar, a bit higher than the previous session’s record closing low of 81.94. Although the native currency opened higher at 81.61, it was unable to hold its gains due to dollar purchases by international banks and oil corporations. However, the rupee avoided dropping below the 82 mark.
“The Indian rupee is projected to open higher as the dollar index fell overnight, while major G-10 currencies rose versus the greenback.” According to the forward markets, the spot USDINR could open around 81.65 and consolidate in a limited range before the RBI Policy announcement.”
“The resistance for the spot USDINR is at 82.40, with support at 81.50 and 81.10. The pair may retrace in the immediate term as momentum oscillators on the daily and hourly charts weaken. Asian equities fell on Friday, following another loss on Wall Street, as increased interest rates and upheaval in Europe fueled fears of a worldwide recession.”
“The RBI will publish its policy rate decision at 10 a.m. today, with the market expecting a 50 basis point boost and a 75 basis point surprise from the RBI when compared to all other countries.” The language of the RBI MPC will be crucial. The rupee is projected to open at 81.59 and trade in a range of 81.30 to 82.00, remaining volatile when the RBI announces its monetary policy. Yesterday, the RBI protected 81.92 levels by selling dollars from its vaults. Exporters may wait for an 81.50 stop loss trigger or sell towards 82.00 levels. Importers should buy declines in the pair to hedge their payables, ideally towards 81.45.”