BackRupee may hover near 81 against dollar in the coming week
On the back of the strong greenback, stubborn offloading of risker assets by overseas investors, and fear of global recession amidst inflationary pressure, monetary policy tightening, and geopolitical tensions - the rupee has stayed vulnerable against the American currency.
PremiumThe unrest in the Indian rupee against the US dollar escalated further as the local unit touched an all-time low for the fifth consecutive session at the interbank forex market. On the back of the strong greenback, stubborn offloading of risker assets by overseas investors, and fear of global recession amidst inflationary pressure, monetary policy tightening, and geopolitical tensions - the rupee has stayed vulnerable against the American currency. Currently, the rupee is slightly shy of the 80 levels against the dollar. And, in the upcoming week, the rupee might just become weaker and hit new record lows.
On Friday, the rupee weakened for the eleventh week in a row and closed at 79.8775 against the dollar. Earlier, in the day, the local currency touched a record low of 79.96.
Meanwhile, Sensex closed at 53,760.78 up by 53,760.78 points or 0.65%. Nifty 50 settled at 16,049.20 higher by 110.55 points or 0.69%.
Data given by NSDL showed that from July 1-15, FPIs outflow in the equity market stood at ₹7,432 crore. So far this year, FPIs have removed about ₹2,24,790 crore - accounting 95% of the total outflow in the overall Indian market. The foreign funds' outflow is about ₹2,36,672 crore in the Indian market including equities, debt, debt-VRR, and hybrid.
Investors will keenly watch the US Fed policy in the next week for placing their bets in the market as the FOMC stance on interest rates will give further understanding of how the economy is likely to move ahead. It will also either spark or calm recession fears.
Vinod Nair, Head of Research at Geojit Financial Services said, "Volatility has re-emerged and investors have turned their focus on upcoming Fed policy in the backdrop of heightened US inflation. Fall in crude prices and reduction in FII selling added optimism to the domestic market while gloomy IT results, depreciating rupee, and fear of global recession are restricting sizeable up move. In addition to the Fed policy, the domestic market's near-term momentum will be influenced by ongoing quarterly earnings."
In the coming week, the rupee is expected to range from 79.50-80.50 against the dollar.
Jateen Trivedi, VP Research Analyst at LKP Securities said, "Rupee traded in a range between 79.80 and 79.98. As dollar index traded in a range broadly the trend for dollar is positive till the time it is above 105$ next hurdle for dollar can be seen around 110$ hence rupee can be seen weak trend continued towards 80.50. 79.25 will act as resistance for rupee and break above 79.25 will trigger short covering for rupee. Rupee range can be seen between 79.50-80.50 for the coming week."
In the July bulletin, RBI said in a global landscape marred by fears of recession and war, the Indian economy shows resilience. The recent revival of the monsoon, the pick-up in manufacturing and services, stabilisation of inflation pressures and strong buffers in the form of adequate international reserves, sufficient foodgrain stocks, and a well-capitalized financial system together brighten the outlook and strengthen the conditions for a sustainable high growth trajectory in the medium-term.
India's forex reserves declined by $8.062 billion in the week ending July 8, 2022, to $580.252 billion. In the week under review, the foreign currency assets dipped $6.656 billion to $518.089 billion, while gold reserves and SDRs slipped by $1.236 billion and $122 million to $39.186 billion and $18.012 billion compared to the previous week.
So far this year, the Indian rupee has depreciated nearly 7% against the US dollar. The local unit ranged between 73-74 majorly in January month.
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