Looking at a sharp rally in the dollar index, we feel the USDINR pair should move to 74.6 levels, says ICICI Direct.
Indian rupee is trading lower by 14 paise at 74.21 per dollar, amid selling seen in the domestic equity market.
It opened 18 paise lower at 74.25 per dollar against previous close of 74.07.
The Sensex was down 379.93 points or 0.78% at 48402.43, and the Nifty was down 89.60 points or 0.61% at 14541.50.
“The FX market has factored in the Covid related shortfall in economic output, but if the situation goes out of control, then we may again see an increase in USDINR bids. For now, the focus will be on US economic data and slew of IPOs due to hit the local equity market in the coming sessions,” said Rahul Gupta, Head Of Research- Currency, Emkay Global Financial Services.
“The USDINR spot is hovering around 74 zone, there are no signs of Fed withdrawing policy accommodation, so we expect the spot to remain sideways within 73.50-74.50,” Gupta added.
Oil prices climbed on Monday as optimism about a strong rebound in fuel demand in developed countries and China in the second half of the year overshadowed growing concerns of a full lockdown in India to curb the COVID-19 pandemic.
Gold prices ticked up on Monday, supported by a muted dollar ahead of a series of U.S. data, while auto-catalyst metal palladium held firm after surpassing $ 3,000 per ounce on concerns over supply shortage in the previous session.
USDINR is consolidating above its support levels of 74.25. Looking at a sharp rally in the Dollar index, we feel the USDINR pair should move to 74.6 levels, said ICICI Direct.
The dollar-rupee April contract on the NSE was at Rs 74.39 in the last session. The open interest rose 4.2% for the May series, it added.
The dollar clung to a recent bounce on Monday as investors made a cautious start to a week crammed with central bank meetings and big-ticket U.S. economic data, looking for clues on the outlook for global inflation and for policymakers’ response.
