USDINR pair has managed to hold the support near 74.90/75.00 on spot for the past two trading sessions. However, prices need to sustainably break above 75.25 to score a reversal from downtrend
The Indian rupee declined by 7 paise against the US currency on Thursday as geopolitical tensions pushed investors towards safe-haven assets. Additionally, sustained foreign fund outflows and elevated crude oil prices also weakened the domestic currency. At the interbank foreign exchange, the local unit opened at 74.94 against the greenback but later dropped to a low of 75.18 before settling at 75.11, down 7 paise from the previous close. “Rupee is expected to depreciate today due to stronger dollar and pessimistic sentiments in the global markets. However, easing crude oil prices may prevent further decline in the rupee. US$INR (February) is likely to rise towards 75.50 levels for the day. Meanwhile, investors will keep an eye on Fed monetary policy report from the US,” said ICICI Direct.
Gaurang Somaiya , Forex & Bullion Analyst, Motilal Oswal Financial Services
“Rupee opened on a flat note but fell in the first half of the session as uncertainty between Russia and Ukraine increased. Early morning exchanges of fire between Kyiv’s forces and pro-Russian separatists – who have been at war for years and where a ceasefire is periodically violated – caused alarm as Western countries have said an incursion could come at any time. Market participants remain on the edge as volatility remained elevated following updates on the ongoing tensions between Russia and Ukraine. Safe havens are outperforming as geopolitical development dampened hopes for a diplomatic deal to avert military action around Ukraine.”
“Dollar retraced against its major crosses also after Philly Fed manufacturing index data released from the US came in lower than estimates. Today, from the US, a couple of Fed members will be speaking and that could trigger further volatility for the dollar. More updates on the ongoing tension between Russia and Ukraine is likely to provide cues to major currencies. We expect the USDINR(Spot) to trade sideways and quote in the range of 74.80 and 75.40.”
Bias continues to be downward for Rupee: Kotak Securities
“Iran nuclear talks and the possibility of US-Russia talks over Ukraine have pushed oil prices marginally lower. Brent needs to fall towards $80-85 for Rupee to make a run for 74.00-74.50 zone on spot. The rupee has been resilient but over the past two trading sessions, choppy conditions in the equity market and bids from oilers have stalled its downside momentum. However, bias continues to be downward, and hence sell on rise is advisable with a stop above 75.30 on a daily closing basis.”
“Markets will keep a close eye on the Ukraine-Russia situation as oil prices volatility feeds into volatility for USDINR. USDINR pair has managed to hold the support near 74.90/75.00 on spot for the past two trading sessions. However, prices need to sustainably break above 75.25 to score a reversal from downtrend.”
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