Rupee Outlook - March 22, 2022 - Reliance Securities

Mr. Sriram Iyer, Senior Research Analyst at Reliance Securities

The Indian Rupee depreciated against the U.S. Dollar as oil prices rose this Monday as conflict in Ukraine worsened and heightened concerns about the risk of disruptions in energy supplies.

Weakness among most Asian currencies, ahead of a speech from Federal Reserve Chair Jerome Powell, also weighed on the local currency.

The Rupee ended at 76.12 weakening about 0.4% compared with 75.80 on Thursday.

Attacks on Saudi energy facilities by Yemen's Houthi rebels also heightened concerns over global oil supplies.

Traders are awaiting a speech from Fed Chair Powell later today. This comes on the back of hawkish Fed and officials last week.

India's benchmark BSE Sensex equity index declined about 1%, in line with most major Asian shares excluding Japan and some Chinese indexes.

NDF is at 76.17/23 this Monday evening vs. a close at 75.97 on Friday.

Indian bond yields ended largely unchanged. The benchmark 6.54% ended 6.78%, against 6.78%, on Thursday.

The U.S. Dollar strengthened against a basket of major currencies on Monday, in the wake of comments from U.S. Federal Reserve Chair Jerome Powell that opened the door for the central bank to take a more aggressive monetary policy path.

Powell said the central bank must move "expeditiously" to bring too-high inflation under control, and will, if needed, use bigger-than-usual interest rate hikes to do so.

The Indian Rupee is expected to open weaker and weaken against the dollar this Tuesday as Treasury yields surged after U.S. Federal Reserve Chair Jerome Powell signalled willingness to raise rates more aggressively to combat inflation.

The Rupee could open at 76.30-76.35 compared with 76.11 close on Monday.

Most Asian and EM peers were also weak this Tuesday morning and a continued rise in Crude oil prices will also weigh on domestic sentiments.

NDF is at 76.32/39 this Tuesday morning vs a close at 76.25 on Monday.

Technically, if USDINR spot pair continues to trade above 76.20 level, it could continue to witness a bullish momentum up to resistance zone at 76.50-76.60. A trade below could pull the pair to the support zone at 76.00-76.10.

The U.S. Dollar was stronger on Tuesday morning in Asian trade after a hawkish speech from Federal Reserve Chair Jerome Powell raised bets on higher U.S. interest rates.

Technically, if Dollar Index trades trade above $98.50 it could witness a bullish momentum up to the resistance zone at $98.75-$99.00. A trade below could pull the Index to the support zone at $98.13-$97.90.

Source : Equity Bulls

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