The rupiah appreciated sharply against the dollar, posting its biggest single-day gain in two months on the back of strong capital inflows, even as sentiment in the currency market was boosted by better-than-expected GDP growth data for FY23 and the probability of the US Fed avoiding a rate hike at its next meeting.

The Indian unit, which opened stronger at 82.51, closed at 82.4050 per dollar from the previous close of 82.7225, up about 32 paise.

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“The rupee appreciated due to three factors: there were some dollar inflows from companies; the Chinese currency appreciated; and the dollar index fell on comments from some US Fed officials that the Fed might not raise the rate at its next meeting. RBI has been defending the 82.80-83.00 level since November 2022. From November to today, the rupee has closed above 83 only twice,” said CR Forex Advisors MD Amit Pabari.

Pabari expects the rupee to trade in the 82-82.80 band over the next 10-15 days.

In intraday trading, the Rupee tested a high and a low of 82.3675 and 82.5125, respectively.

Aditi Gupta, economist at Bank of Baroda, said overall the rupee is likely to trade in the 82-83/$ range in the next two weeks.

“The dollar has seen some correction recently amid dovish comments from the Fed vice chair designate that have led markets to lower expectations of a June 2023 Fed rate hike.

“The key drivers for the INR (rupee) in the next two weeks will come from the US CPI and employment report, as well as the OPEC+ meeting.”

In the longer term, the INR is likely to strengthen and trade in the 80-82/$ range in FY24, he said.

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