The rupee is expected to depreciate on muted Asian market and elevated crude oil prices. USDINR (January) is expected to trade in a range of 74.30-74.60.

The Indian rupee settled at Rs 74.27 againsts the US Dollar on Friday. Last week, the local unit was rangebound to close at 74.31 against the greenback. In the recent past, rupee has been choppy against the US dollar, overall decreasing in the last six months. Surge in US treasury bond yields along with rising Omicron cases is expected to weaken the domestic currency further this week. However, re-commencement of FIIs inflows may arrest any major fall in rupee’s value vis-a-vis USD, according to experts.

Rupee likely to depreciate on muted Asian market, elevated crude oil prices: ICICI Direct

The US dollar fell 0.61% on Friday as US non-farm payrolls data showed the US added 199,000 jobs in December below the estimate of 400,000. However, further downside was cushioned on a surge in US treasury yields and decline in US stocks. Yields remained elevated as recent job data was seen solid enough to keep Federal Reserve tightening path intact. Rupee future maturing on January 27 appreciated by 0.18% on rise in risk appetite in domestic market and FII inflows. However, further gain was prevented on elevated crude oil prices

The rupee is expected to depreciate on muted Asian market and elevated crude oil prices. Further, the market expects the US Federal Reserve to remain intact on its path of monetary tightening as recent economic data was seen supportive. US$INR (January) is expected to trade in a range of 74.30-74.60

USDINR pair to trade sideways: Gaurang Somaiyaa, Forex & Bullion Analyst, Motilal Oswal Financial Services

Rupee continued to consolidate in a narrow range but volatility within the range remained elevated after FOMC meeting minutes released last week came in hawkish. Market participants also remained cautious ahead of the important non-farm payrolls data that was released on Friday. Data showed the US economy added 199,000 jobs last month and at the same time data for November was revised up to show payrolls advancing by 249,000 jobs instead of the previously reported 210,000. The unemployment rate dropped to 3.9% from 4.2% in November, underscoring tightening labor market conditions. The report also increased expectations the Federal Reserve will begin to hike interest rates at its March meeting, with futures on the federal funds rate implying a 90% chance of a hike.

Dollar fell after the jobs report but gains in Euro were limited after inflation in the Euro zone rose 5% in December. Euro zone policymakers have said they expect inflation to gradually slow down in 2022 and a rate hike will likely not be needed this year thereby capping gains for the currency. Despite the rapid spread of the Omicron variant, investors have increasingly viewed it as unlikely to derail the global economy or more aggressive actions by central banks. Today, volatility could remain low as no major economic data is expected to be released from the US. Later during the week, on the domestic front investors will be eyeing inflation and industrial production number and that could trigger volatility for the dollar. USDINR pair is expected to trade sideways and quote in the range of 74.20 and 74.80.

Rupee projected to outperform in short term: Kshitij Purohit, Lead Commodity & Currency, CapitalVia Global Research

The dollar began the week on a high note, with traders betting that data on US inflation and appearances by numerous Federal Reserve officials would boost the case for higher interest rates. On Wednesday, the US will release its inflation data, with the headline CPI expected to rise to a scorching 7% year-on-year. The rupee gained 12 paise against the dollar on Friday, closing at 74.30, as local shares rose. The local currency opened at 74.41 against the greenback on the interbank forex market, hit an intra-day high of 74.25, and concluded the day at 74.30, up 12 paise from its previous close of 74.42.

The rupee appreciated versus the US dollar after taking signals from regional currencies. Risk assets began to rebound after early shocks as markets priced in a jump in viral infections and the Fed’s tapering, while the Dollar dropped. The Indian rupee is projected to outperform in the short term due to improved debt market inflows. The global oil benchmark, Brent crude futures, climbed 0.99% to USD 82.80 per barrel.

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