The Indian rupee opened marginally higher at 82.78 per dollar on Wednesday against the previous close of 82.85. The local unit is expected to depreciate, mainly on the back of a surge in crude oil prices and risk aversion in equity markets. Oil prices are rising on supply concerns after Russia signalled the possibility of a production cut and winter storms across the US affecting logistics and production of petroleum products. “Further, persistent FII outflows will hurt the rupee. US$INR (January) is holding support near 82.75 level. As long as it sustains above this level, it may rise back to 83.20 levels,” said ICICI direct in a note.
Bias for Rupee remains weak
“Month-end dollar demand from oil importers and year-end rebalancing foreign fund outflows weighed on the Indian rupee in today’s trade as it surrendered Monday’s gain. The surge in crude and precious metal prices also weighed on the local unit. Broadly speaking, the rupee has been stuck in the range of 82.40 to 82.90, lacking the directional move ahead of year-end. In the near term, the rupee is expected to trade between 82.40 to 82.90 against the dollar. The bias for the local currency remains weak as long as it trades below 82.40,” said Dilip Parmar, Research Analyst, HDFC Securities.
USDINR to trade sideways
“Rupee traded with low volatility despite volatility in domestic and global equities. In the overnight session, the dollar surged but in the last hour eroded some of its gains. Most market participants remained on the sidelines following Christmas and New Year holidays.In the last few weeks, major central banks came out with their policy statements and volatility for riskier assets and the dollar remained elevated,” said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.
“Yesterday, data showed the US merchandise-trade deficit narrowed in November to the smallest since December 2020 due to a plunge in imports. The decline in imports was broad based, led by a 13% drop in the value of consumer goods.The shortfall decreased 15.6% — the most since 2009 — to $83.3 billion last month. Today, focus will be on the pending home sales number from the US. We expect the USDINR(Spot) to trade sideways and quote in the range of 82.40 and 83.20,” he added.
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