Rupee to depreciate and reach the level of 80.20 this week. Further, sharp rise in US dollar may put some pressure on Rupee but persistent foreign funds inflow should ease out pressure.
Rupee traded flat in the week despite strong US dollar and weak inflation data from the India. The relative resilience was seen due to persistent foreign funds inflows in domestic equities and drop in crude oil prices. Dollar index edged higher as minutes from the Federal Reserve’s July meeting showed, that Fed officials remained committed to get inflation under control and the U.S. central bank could raise rates further to tame inflation. Further, strong economic data from the US supported dollar. The number of Americans filing new claims for unemployment benefit fell to 250,000 the week that ended August 13th, well below market expectations of 265,000.
Additionally, the Philadelphia Fed manufacturing index in the US rose to 6.2 in August of 2022 from -12.3 in July, returning to positive territory after two consecutive negative readings and above market expectations of -5. Moreover, dollar was supported by rise in US 10 years bond yields. We expect rupee to depreciate and reach the level of 80.20 this week. Further, sharp rise in US dollar may put some pressure on Rupee but persistent foreign funds inflow should ease out pressure. Investors will closely watch major economic data from the US to get more clarity.
United States second quarter GDP is expected to remain unchanged at -0.90%. USDINR is trading in resistance and support wedges by making higher high and lower low pattern. The pair is expected to continue trading in the same pattern and may surpass the hurdle of 80 to continue its upward trend towards the 80.20 this week.
For Monday, Rupee may depreciate amid strong US dollar index. Further, rupee may be pressurised by weakness in domestic equities market. However, sharp depreciation may not be there due to drop in crude oil prices. USDINR (Aug) is likely to trade in the range of 79.90-79.70.
