Rupee likely to appreciate towards 82.40 level in March quarter, dollar index may test 96-97 range: Analyst

Rupee traded around 83.13 against the US dollar on Tuesday dragged by elevated crude oil prices and dollar demand from importers.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.25% lower at 103.08.

Analysts expect the domestic currency to appreciate towards 82.40 levels against the US dollar in the quarter ended March 2024.

“As we transition from a relatively stable year for the Indian rupee, the upcoming year is poised to be shaped by general elections in over 60 countries, including major countries like the US, UK and India. The dynamics between market expectations and central bank policy decisions will be a key factor, contributing to potential volatility in 2024,” said Abhilash Koikkara, Head, Forex & Commodities, Nuvama Institutional Equities.

Also Read: Stock market today: Sensex drops over 1,200 points from day’s high, Nifty 50 falls 1%: 5 key reasons behind market dip

He believes global currency movements will be significantly influenced by geopolitical developments and decisions made by central banks, setting the stage for a potentially volatile year.

He expects the Indian rupee to trade in a range of 82.40 - 83.40 per US dollar during January - March 2024.

“Technically speaking, USDINR which was consolidating in a stiff range of 82.90-83.40 levels has eventually given a bearish break which can open the possibility for its previous swing low of 82.40 levels. A pattern break of a descending triangle pattern has paved the way for the price to close below 82.90 levels which was not seen from the past three months. A sustainable move below 82.90 will drag prices lower in the range of 82.00-82.40 levels,” Koikkara said.

Moving forward, he anticipates an appreciation in the rupee, projecting a downward movement towards the 82.40 levels, followed by consolidation within the range of 82.00-82.50.

Also Read: Import duty on gold, silver findings and precious metal coins increased to 15%

Meanwhile, the US dollar index is expected to trade in the range of 104.50 - 97.00 during January - March 2024. Any positive inflation coupled with labour market tightness is expected to erode the dollar index as investors anticipate a 150- basis points rate cut to alleviate recessionary concerns

“The Dollar Index is relinquishing its 2023 gains due to a shift in the Federal Reserve’s monetary policy. There is an expectation of the first rate cut in March 2024, with the index initiating a downward trend following the December meeting. It is anticipated that DXY may drop below its previous low of 99.60 and could potentially test the 96.00-97.00 range in the upcoming quarter,” said Koikkara.

Catch Live Market Updates here

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.