By Raj Deepka Singh
Rupee appreciated in the previous week despite a strong dollar and elevated treasury yields. Rupee gained strength on reports that RBI has asked some banks to stop taking fresh arbitrage positions in the non-deliverable forward’s market. Additionally, softening crude oil prices and inflows in the equity markets aided sharp gains in rupee.
US ISM Manufacturing PMI data is likely to show that activity in the sector contracted for the 10th consecutive month. Non-farm payrolls data is projected to show that a smaller number of jobs were added to the economy in June 2023, indicating that the US labor market is cooling down gradually, which could ease pressure on inflation. CB consumer confidence data is likely to show that US consumer confidence continued to ebb and PCE price index is anticipated to show inflation continued to ease but with slower pace.
Technical Levels
We expect Rupee to face a hurdle near 83.00 level amid expectation of correction in dollar and US treasury yields and softening of crude oil prices. Further, India’s economic growth is likely to accelerate to around 7.8% in April-June 2023 period compared to 6.1% recorded in the previous quarter. We expect the USDINR pair to appreciate further towards 82.20 levels in this week as long as it sustains below level of 83.00. Only a close above 83.00 levels may reverse the trend and open the door for 83.30/83.50 levels.
For Monday Rupee future maturing on Aug 29th may trade in a range of 83.80-83.50 levels.
(Raj Deepka Singh, Analyst – F&O, Commodity, & Currency, ICICIdirect. Views expressed are the author’s own. Please consult your financial advisor before investing.)
