The Indian Rupee opened marginally higher at 82.68 per dollar on Monday against Friday’s close of 82.73. The domestic currency is likely to appreciate today primarily on the back of a weaker dollar. Moreover, expectations that the country’s current account deficit had likely peaked may help the rupee. On the other hand, a rise in crude oil prices may pressurise the local currency. “US$INR (January) may trade in a range of 82.70-82.93 for the day,” said ICICIdirect. Rupee depreciated by around 10% against the US dollar in 2022 on account of sharp appreciation of the greenback as the US Federal Reserve raised interest rate to tame inflation.
Rupee may appreciate to 81.5 in near-term
“Indian indices will have a slightly negative opening, following weaker US futures. On the final day of the year, FII sold Rs. 2,950 crores worth of shares but considering current domestic fundamentals and sentiment, FIIs will surely remain bullish on India and we could see inflows. Overall, fundamentals are Rupee supportive and there is no major reason for the Rupee to depreciate beyond its all-time low. Nonetheless, it would be interesting to see how the Rupee appreciates beyond 82.40 levels. If it can make out the same, then we could see further appreciation towards 82-81.50 levels over the short term,” said Amit Pabari, MD, CR Forex Advisors.
Negative bias in USDINR to continue
“As maintained all through last week, we will continue to see the 82.84/88 region as a supply zone, even though downside momentum has failed to kick in. Negative bias will continue until then, but once above 82.88, the 83.25 view would have to be reconsidered. But a directional upside is less likely and favoured view expects extended consolidation inside 82.75-82.59,” said Anand James – Chief Market Strategist at Geojit Financial Services.
Rupee likely to appreciate to 78 this year
Rupee depreciated amid geopolitical tensions and aggressive monetary tightening across the globe. Geopolitical uncertainty caused by the war in Ukraine led energy prices to increase. Surge in energy prices led to a rise in inflation and even impacted current account deficit. RBI took measures to tame stubbornly high inflation. Since May, it has hiked repo rate by 225 bps taking it to 6.25%. On top of this, FIIs have sold close to $16 billion in equities in CY22, which has had an adverse impact on the rupee. Analysts at ICICI direct expect rupee to perform well this year. They expect the local unit to appreciate back to 78 levels as Indian economy is exhibiting resilience to external headwinds.