The Indian Rupee strengthened 32 paise to 82.34 against the US dollar in early trade on Monday. The local unit is expected to appreciate amid weakness in the dollar, and a rise in risk appetite in global equity markets. “Market sentiments improved as fresh data showed slowdown in wage growth, a buoyant sign for Fed battle against inflation that could ease the pressure for further rate hike. Further, softening of crude oil prices will support rupee,” said ICICIdirect, adding that US$INR (January) is expected to trade in a range of 82.30-82.75.
Rupee may appreciate to 81.50 level
“The USDINR has broken crucial 82.40 support, triggered by, the easing of China’s three-line property rule that was meant to impose strict debt and cash-flow targets on real estate firms lead to optimism about the Chinese real estate market. We had been cautioning about the Chinese currency (CNY) getting stronger could be a triggering point for USDINR breaking below 82.40. Well, the fall in DXY too helped the ship of the rupee sail past 82.40 levels. If the USDINR pair continues to trade below 82.40 in the initial hours, then there is a 90-95% probability that the pair is moving towards 81.80 to 81.50 levels,” said Amit Pabari, MD, CR Forex Advisors.
High inflation data from US, India, and China to trigger further volatility for rupee
“Rupee consolidated in a narrow range ahead of the employment data that was released from the US. Data showed the US economy added 223k new jobs in December, compared to market forecasts of 200k and a revised prior month’s 256k. The unemployment rate fell to 3.5% from a prior reading of 3.7%. This week, focus will be on the inflation number that will be released from India, US, and China. A higher number is likely to trigger further volatility for major crosses including the rupee. We expect the USDINR(Spot) to trade sideways and quote in the range of 82.05 and 82.50,” said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.
“As long as above 82.59, expect upside attempts, but failure to float above 82.75 will render the trend weak, and pull back could gain downside momentum aiming 82.4,” said Anand James, Chief Market Strategist at Geojit Financial Services.
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