Rupee - Feb 1, 2021 - Reliance Securities

Mr. Sriram Iyer, Senior Research Analyst at Reliance Securities

The Indian Rupee depreciated for the 2nd straight session against the U.S. currency this Monday as the government's higher-than-expected fiscal deficit and speculations that it would impact India's rating.

The Rupee ended at 73.02 compared with 72.95 in the previous session.

According to the Union Budget 2021-22, the fiscal deficit would be pegged at 6.8% of gross domestic product for FY22, while the government has pegged at 9.5% of gross domestic product for FY21. The budget statement also added that the government will try and bring down the fiscal deficit target to 4.5 % of GDP by FY25-26.

Meanwhile, the benchmark BSE Sensex ended 5% higher, recovering all of last week's losses this Monday and capped weakness of the domestic unit.

Asian currencies were largely range-bound barring the Chinese yuan that was 0.5% weaker against the dollar.

The one-year forward premium was at 3.59 rupees against 3.57 rupees in the previous session.

With the budget out of the way, markets will now look ahead to the RBI's monetary policy this week for further cues.

Technically, the USDINR Spot pair took support at 72.80 level and bounced back up to 73.15 levels and ended above 73.00 level indicating a sideways momentum to continue within the range of 72.70-73.20 levels.

Source : Equity Bulls

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