The Indian Rupee opened marginally higher at 82.77 per dollar against the previous close of 82.80 per dollar. The local unit is expected to appreciate on Thursday amid a weak dollar and softening of crude oil prices. Further, optimistic global market sentiments may support the currency pair. However, sharp gains may be prevented as investors are wary ahead of major economic data from the US. “US$INR (January) is facing strong resistance near 83.10 levels. As long as it sustains below this level it may slip back to 82.50 levels,” said ICICIdirect. Today, the focus will be on services PMI and private payrolls number from the US. “We expect the USDINR(Spot) to trade positive and quote in the range of 82.50 and 83.05,” said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.
FII outflows to put pressure on Rupee
“Indian Rupee appreciated by 0.19% on Wednesday on sharp decline in crude oil prices and a weak US Dollar. Robust macroeconomic data also supported the domestic currency. We expect Rupee to trade with a slight negative bias as sustained foreign outflows may continue to put downside pressure on Rupee while weak crude oil prices may prevent sharp fall. Traders may also remain cautious ahead of FOMC minutes and ISM manufacturing PMI and JOLTS job openings data from US. USDINR spot price is expected to trade in a range of Rs 82.30 to Rs 83.30,” said Anuj Choudhary – Research Analyst at Sharekhan by BNP Paribas.
Downside risks to rupee limited
“For most part of 2022, most currencies depreciated more due to dollar’s inherent strength than their own weakness. Likewise, in recent terms, their move is likely to be denominated by USD weakness caused by a slower pace of future rate hikes by the US Fed. However, the unrelenting geopolitical tensions and risk of recession shall keep a check on weakness of the dollar. On the domestic front, the Indian economy stands resilient to global factors with sturdy GST collections, robust consumer spending and narrowing trade deficits. Also rupee performance has caught up with other currencies so downside risks to rupee are limited at this stage, with flows into India being the critical element to be watched out,” said Abhilash Koikkara, Head of Forex, Nuvama Professional Clients Group.