The local factors along with US fiscal stimulus uncertainty will continue to keep USDINR broadly in between 72.50-73.50, says Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services.
Indian rupee gained in the early trade on Monday. It opened 8 paise higher at 72.87 per dollar against Friday’s close of 72.95, with buying seen in the domestic equity market ahead of Union Budget 2021.
On January 29, the rupee ended higher at 72.95 against Thursday’s close of 73.04.
At 10:05 IST, the Sensex was up 422.60 points or 0.91% at 46708.37, and the Nifty was up 102.50 points or 0.75% at 13737.10.
“The volatility in FX will increase as there is an event risk ahead of budget and RBI policy. As long coronavirus risk prevails, it is obvious that fiscal deficit for the current year will widen, and overall the budget has to be expansionary,” said Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services.
“In absence of additional growth measure, a knee jerk reaction can be negative on rupee. But there are IPOs lined up for subscriptions which can attract FII participation so until the USDINR spot remains below 73.50, it will continue to be bearish. The local factors along with US fiscal stimulus uncertainty will continue to keep USDINR broadly in between 72.50-73.50,” he added.
The safe-haven dollar found support at the start of a new week with traders remaining wary amid the battle on Wall Street between hedge funds and retail investors.
Oil prices edged higher on Monday after a weak start, holding on to the past three months of gains, although patchy coronavirus vaccine rollouts, new infections and the discovery of new variants are keeping a lid on prices.