By Raj Deepak Singh
Rupee depreciated to its lowest level in two weeks on the back of strong dollar and outflow of funds from the domestic markets. The improved economic numbers from the US have pushed the dollar index to its highest level since March 2023 at 105. Further, rise in crude oil prices, which moved to its highest level in 8-months, also weakened the domestic currency.
Going forward investors will remain cautious ahead of next week’s ECB policy outcome, where the central bank is expected to increase the rates by 25 bps amid higher inflation numbers. On the other hand, the PBOC is expected to cut the one-year MLF rate by 10 bps to support the housing sector. On the domestic front, investors will keep an eye on inflation and industrial production numbers. The expectation of higher inflation numbers could push the RBI to tighten the liquidity conditions.
USDINR is expected to face the hurdle near 83.30 and weaken towards 82.70 amid softness in US dollar and treasury yields. A move below 82.70 would weaken the pair further towards 82.45. On the contrary a move above 83.30 would push the pair towards 83.50.
(Raj Deepak Singh, Analyst, Derivatives, Commodity, & Currency, ICICI direct. Views expressed are the author’s own. Please consult your financial advisor before investing.)
