Rupee - Outlook - April 6, 2021 - Reliance Securities

Mr. Sriram Iyer, Senior Research Analyst at Reliance Securities

The Indian Rupee depreciated against the Dollar on Monday amid concerns that rising Covid-19 cases and subsequent lockdowns in some states may hurt economic recovery and cause foreign outflows.

The Rupee ended at 73.29 to the dollar compared with 73.11 in the previous session.

Meanwhile, India's Monetary Policy Committee, which will conclude on Wednesday, is widely expected to keep the key repo rate unchanged at a record low of 4%.

The one-year forward premium was at 3.59 rupees, against 3.71 rupees in the previous session.

The benchmark BSE Sensex and the broader NSE index posted their biggest single session fall since Feb. 26 and ended 1.74% and 1.54% lower, respectively on Monday.

The benchmark 5.85% bond maturing in 2030 ended higher at 98.02 rupees, yielding 6.12%, and posting its biggest single session fall since Feb. 10 and against 97.64 rupees and 6.18% yield at the previous close.

The Indian Rupee could start this Tuesday on a flat to marginally stronger note against the U.S. Dollar tracking the weakness of the Greenback.

However, appreciation bias could be capped amid concerns that rising Covid-19 cases and subsequent lockdowns in some states may hurt economic recovery and cause foreign outflows.

The Rupee could likely open around 73.25-73.26 per dollar compared with 73.29 at close on Monday.

Meanwhile, most of the Asian currencies were stronger this Tuesday morning and could lift sentiments.

Meanwhile, NDF is trading at 73.38/39 this Wednesday morning vs. a close of 73.32 on Tuesday.

Technically, USDINR Spot pair traded on a weak note but did not manage to cross above 73.50 levels but at the same time is sustaining above 73.25 indicating a sideways momentum to continue where support is at 73.20-73.05 levels. Resistance is at 73.50-73.68 levels.

The Dollar fell against the basket of currencies on Monday tracking the weakness of the U.S Bond Yields.

The dollar's drop on Monday even after strong jobs data on Friday and upbeat U.S. services industry activity may indicate that much of the bullish outlook is priced in, at least for the near-term.

The Euro, the Sterling and the safe haven Japanese Yen appreciated against the U.S Dollar on Monday, tracking the weakness of the greenback.

The U.S. Dollar was weaker this Tuesday morning in Asian trade on Tuesday, moving in tandem with retreating Treasury yields from recent peaks despite signs of a robust U.S. economic recovery.

Technically, the Dollar Index could hold onto a pivotal support at $92.45 levels. However, a close below will pull the Index to $92.00. However, above the level the index could continue its bullish momentum up to $93.25.

The Euro, the Sterling and the safe haven Japanese Yen has started flat to marginally stronger against the U.S. Dollar this Tuesday morning in Asian trade.

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Source : Equity Bulls

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