After hitting a record of 83.42 against the US dollar on November 10, the Indian rupee has stabilised and is expected to witness a rangebound movement going into the next week amid lack of fresh triggers, analysts said.
The US dollar is headed for its largest weekly drop for months against the euro, yen and franc on Friday. The 10-year US Treasury yield also hovered near two-month lows.
The drop in the greenback and bond yields comes in anticipation that the US Federal Reserve will not increase interest rates further and pivot to a rate cut early next year.
Rupee is up only 0.1% this week against the US dollar, as compared with 1-2% rally in other Asian currencies.
Also Read: The rupee, its fall, slight recovery and what the RBI did
“The recovery in the domestic equities backed by foreign fund inflows and lower crude oil prices are providing support to the local rupee. The rupee has been a stable currency among the Asian currencies as we know the central bank intervention is around 83.30 level and importers/hedgers demand is around 83 level,” said Dilip Parmar, Research Analyst, HDFC Securities.
However, the Indian currency has mostly been unable to take advantage of the fall in US Treasury yields, softer greenback and the drop in oil prices that hit four-month lows on Thursday.
The 10-year US treasury yield dropped to 4.30% from 4.75% as the market anticipated the US Fed not to raise interest rate at the upcoming policy meeting in December.
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“The rupee has been trading in its own cloud by not reacting to global worries in expectations of better dollar inflows in the domestic bond market and ease of selling in domestic equities. We believe the rupee to hold the range of 83.00 to 83.30 for a few more days amid the absence of fresh triggers which push or pull from the said range,” Parmar added.
Meanwhile, data this week showed the US consumer price index being unchanged in October and the core rate was up 0.2%, weaker than anticipated. Producer prices fell by the most in three-and-a-half years. Moreover, the number of Americans filing new claims for unemployment benefits increased more than expected.
Jigar Trivedi, Senior Research Analyst – Currencies & Commodities at Reliance Securities also believes the USDINR pair to trade in a range.
“The pair is in the range of 83.00 – 83.30 and it is still challenging to take a call. The below forecast economic data from the US pushed the pair towards the low point of the range, however it rebounded. The weakness in the crude oil also didn’t play out in the favour of the rupee. The outlook is range bound and needs to be confirmed for breakout on either side,” said Trivedi.
Also Read: Rupee falls 2 paise to 83.25 against US dollar in early trade
Rupee exhibited resilience against the US dollar after hitting a record low last week. Going ahead, factors such as foreign fund flows, crude oil prices and trends in domestic equities would continue to drive rupee performance.
On November 17, rupee was trading lower at around 83.27 a dollar.
Meanwhile, crude oil prices traded higher after sinking around 5% on Thursday to their lowest in four months.
Brent futures traded 0.18% higher at $77.56 a barrel, while US West Texas Intermediate crude (WTI) gained 0.10% to $72.97.
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Updated: 17 Nov 2023, 02:44 PM IST