Rupee Outlook - March 7, 2022 - Reliance Securities

Mr. Sriram Iyer, Senior Research Analyst at Reliance Securities

The Indian Rupee depreciated against the dollar for the 4th straight session logged its worst week against the dollar in five months as intensifying geopolitical risks due to the Russia-Ukraine conflict kept crude oil prices upside intact, heightening worries about domestic inflation and wider trade deficits.

Additionally, accelerating portfolio outflows from the country's capital markets also weighed on the domestic unit.

The Rupee ended at 76.16 its weakest since December 15, and against 75.91 close in the previous session.

For the week, it weakened by 1.2% and extended last week's 0.8% drop.

Further depreciation may have been capped amid talks of the Reserve Bank of India's dollar sales.

Asian equities and currencies were mostly weaker this Friday and remained weak for the week and weighed on sentiments.

Indian bond yields jumped this week tracking a sharp rally in crude oil prices but ended weaker on Friday amid profit taking ahead of RBI swaps next week.

The benchmark 6.54% bond ended at 6.81%, against 6.83%, close in the previous session.

The U.S. dollar rallied on Friday as worries increased over the impact of the escalating Ukraine-Russia conflict, especially on Europe's growth outlook.

The Dollar also took support following data Friday that showed U.S. job growth surged in February.

Employers in the United States added 678,000 jobs in February, more than economists' expectations of a gain of 400,000. Average hourly earnings were unchanged, however, compared with an expected 0.5% gain.

The Euro fell below $1.10 against the dollar on Friday, hitting its weakest level since May 2020.

The Indian Rupee could start gap down trade this Monday morning as the dollar spiked along with crude oil this morning.

The Rupee could open around at 76.70 to 76.75 per dollar, compared with 76.16 on Friday.

RBI could be present to curb volatility.

NDF is trading at 76.75/86 this Monday morning vs a close at 76.42.

Technically, the USDINR spot pair has given a breakout of Rising Channel formation and further trade above 76.00 level could witness a push up to the resistance zone at 76.33-76.49 levels. A trade below could pull the pair to the support zone at 75.90-75.75 levels.

The USDINR Spot pair could trade in a range of 76.30-77.30 levels in the coming session.

The U.S. Dollar and the Yen is trading stronger this Monday morning in Asian trade as investors moved towards the safe-haven assets.

The Euro and the Sterling were weaker as war in Ukraine drove up commodity prices and stoked fears of a stagflationary shock that would hurt Europe most of all.

Technically, if Dollar Index breakout above $99.00 could see a bullish momentum up to $99.31-$99.66 levels. Support is at $98.90-$98.78 levels.

Source : Equity Bulls

Keywords

Rupee INR RelianceSecurities UkraineCrisis