BackINR vs USD: Rupee dips to its 2-month low on Russia Ukraine conflict, inflation worry
Rupee vs dollar: Russia Ukraine conflict is expected to add support to the soaring crude oil price that may add more worries for US Fed and other central banks across world, believe experts
PremiumINR vs USD: On account of Russia Ukraine conflict adding more fuel to the global inflation worries, Indian National Rupee (INR) has plummeted to its 2 months low of 75.66 levels. According to commodity and currency market experts, Russia Ukraine crisis is expected to add support to the soaring crude oil price that may add more worries for US Fed and other central banks across world. They said that Russia Ukraine war like situation is expected to fuel crude oil prices further northward, which will put further pressure on India's US dollar (USD) outflow leading to more weakness in Indian Rupee against the US dollar.
Speaking on rupee vs dollar; Anuj Gupta, Vice President at IIFL Securities said, "In last two months, Indian rupee has corrected to the tune of near 1.80 per cent and today it has hit its 2-month low of ₹75.66. This depreciation in the Indian currency against the US dollar is due to the soaring inflation rate in India, which yesterday went further up to 5.66 per cent against last week's 5.59 per cent. This rise in domestic inflation is expected to continue further if Russia China crisis doesn't end shortly. This geopolitical crisis has already triggered crude oil price rally and it is about to hit $100 per barrel in near term. In case, Russia Ukraine war like situation further continues, in that case it might go up to $105 per barrel in short term."
Anuj Gupta of IIFL Securities said that due to escalation of Russia Ukraine conflict, crude oil import of India is expected to become dearer and in that case rise in dollar outflow may further weaken rupee and it may go up to 76 levels in near term and 76.50 levels in short term.
Echoing with Anuj Gupta's views; Anindya Banerjee, Deputy Vice President — Currency Derivatives & Interest Rate Derivatives at Kotak Securities said, "Crude oil price continues to march higher and FPI continues to exit their holdings in Indian stocks and bonds. FPIs have sold nearly $5.8 billion in 2022 and nearly $12 billion since September end of last year. However, this relentless selling has been matched by FDI inflows and ECB inflows. Carry traders have not shown any signs of panic even though oil prices are near $100 mark, a 7 year high. Strong commercial flows and favourable real yields are what keep them in Rupee."
Asked about USD to INR outlook, Anindya Banerjee of Kotak Securities said, "As of now, bias remains upward as long as prices sustain above 75.20 on spot. Focus on bullish strategies with a closing stop below 75.20 as a spot reference." However, Anindya Banerjee reminded that if Russia Ukraine tensions ease and oil prices reverse, then USD-INR may reverse with a faster speed.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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