We expect the local currency to stay in the 72.40 to 73.50 band in the near term, says Sugandha Sachdeva VP-Metals, Energy & Currency Research, Religare Broking.
rupee
Indian rupee has recovered the early losses and trading higher by 12 paise at 73.34 per dollar, amid buying seen in the domestic equity market.
It opened 31 paise lower at 73.77 per dollar against previous close of 73.46.
At 11:32 IST, the Sensex was up 679.44 points or 1.38% at 49,779.43, and the Nifty was up 205.50 points or 1.41% at 14,734.70.
“We have seen a sharp reversal on the Indian rupee from 72.20 levels, and the corrective mode is likely to continue. U.S. bond yields have surged on worries about inflationary pressures due to unprecedented liquidity infusion in the system and a series of economic data, which is indicating that the economy is on the path to normalcy. This has in-turn led to a rebound in the dollar index and prompted a selloff in risk assets. However, these factors could potentially lead to monetary tightening in the U.S., despite Federal Reserve Chairman Jerome Powell downplaying inflationary concerns,” said Sugandha Sachdeva VP-Metals, Energy & Currency Research, Religare Broking.
“We think that the rupee could see some more depreciation till 73.50 mark, as the narrowing interest rate differential between India and US could prompt some outflows from the Indian bond and equity market. However, it is too early to term this as a weakening bias for the domestic currency, and unless it sustains levels below 73.50 comfortably, scope for appreciation remains.”
“Another important trigger for the rupee to watch out for will be the rising crude oil prices. We believe that the likely easing of supply cuts by the OPEC and its allies could put some pressure on crude prices and not immediately impact the rupee. We expect the local currency to stay in the 72.40 to 73.50 band in the near term,” she added.
Oil prices rose more than $ 1 on Monday on optimism in the global economy thanks to progress in a huge U.S. stimulus package and on hopes for improving oil demand as vaccines are rolled out.
The USDINR March futures closed at 74.19 levels as a sharp up move was seen on the back of rising US yield and huge sell-off in domestic equities. We feel the rupee is likely to consolidate near 74 levels, said ICICI direct.
The dollar-rupee March contract on the NSE was at Rs 74.19 in the last session. The open interest increased almost 1.99% in the March series, it added.
