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Rupee vs dollar: On expectations of 25 bps to 50 bps interest rate hike in the European Central Bank (ECB) monetary policy meeting scheduled on 21st July 2022 and dollar index trading slightly lower in early morning session, Indian National Rupee (INR) gained 6 paise against the US dollar (USD) and ascended to 79.76 levels on Monday. At the interbank foreign exchange, the Indian rupee opened at 79.76 against the US dollar, logging 6 paise gain over the last close. In early morning session today, Indian currency witnessed a high of 79.72 and low of 79.81 against the US currency.

According to currency experts, dollar index has eased in early morning session on Monday because speculations are high that ECB may announce 25 to 50 bps interest rate hike in its upcoming monetary policy meeting scheduled on 21st July 2022. They said that if the ECB decides to raise interest rates by 50 bps, then in that case dollar index is expected to come down at 105 levels in next fortnight. They advised traders and forex investors to maintain 'sell on rise' strategy as dollar ECB is under huge pressure to raise interest rate in its upcoming monetary policy meeting.

Speaking on the reason for rise in Indian rupee against the US dollar, Anindya Banerjee, Deputy Vice President at Kotak Securities said, "Speculations are high that ECB may announce 25 to 50 bps interest hike after its monetary policy meeting scheduled on 21st July 2022. Due to this speculation, US dollar has eased a little bit that has led to rise in Indian currency. If the ECB announces 50 bps interest rate hike, then dollar index is expected to go up to 105 levels, helping Indian rupee to further appreciated up to 79 per dollar levels in next fortnight." He said that immediate support for dollar index is placed at 107 and it can be breached within this week if the ECB announced a 50 bps interest rate hike.

Echoing with Anindya Banerjee's views, Anuj Gupta, Vice President — Research at IIFL Securities said, "There is nothing wrong with Indian rupee.. In fact, dollar index has risen to the tune of 20-year high after US Fed's hawkish stance on interest rate hike. Dollar index that used to hover around 90 levels has suddenly jumped to the tune of 109.30 levels. So, the recent dip in Indian rupee is because of the strength gained by the US dollar. If we compare Indian rupee with other major currencies, we would found that rupee has outperformed them by good margins."

"The reason for Indian rupee outperforming major currencies except the US dollar is RBI's policy towards inflation control. Indian government has managed to keep inflation undeRr control and it is not a big issue for us like it is for the US, European Union and other major economies," said Anindya Banerjee of Kotak Securities.

Advising forex traders and investors to maintain 'sell on rise' in USDINR, Anuj Gupta of IIFL Securities said, "One can sell US dollar at 80 levels keeping stop loss at 80.40 for the target of 79.40."

The Indian rupee on Friday rebounded from the near-80 levels to close higher by 17 paise at 79.82 against the US dollar.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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