Rupee Outlook - March 28, 2022 - Reliance Securities

Mr. Sriram Iyer, Senior Research Analyst at Reliance Securities

The Indian Rupee appreciated on Friday against the U.S. Dollar, tracking the fall of the oil prices and marginally weaker greenback.

However, the local unit ended weaker for the week largely due to the volatility in crude oil prices which dampened sentiment for risk assets in the region.

The Rupee ended at 76.20 this Friday, compared with 76.37 close on Thursday.

For the week, the rupee weakened 0.5%, compared with a rise of about 1% last week.

Indian bond yields fell marginally on Friday but strengthened in the week as aggressive monetary tightening by the Federal Reserve push U.S. bond yields higher and weighed on sentiments back home.

Moreover, risks remain elevated in the domestic markets as crude oil prices remained firm last week.

The benchmark 6.54% ended at 6.81% against 6.83% close yesterday.

In the overseas markets, the dollar edged higher against a basket of major currencies on Friday, putting it on track for a third straight day of gains, as the Federal Reserve could be aggressive in combating inflation.

The Euro and the Pound Sterling weakened against the Dollar on Friday.

The Indian Rupee could open weaker against the dollar this Monday.

However, investors will remain wary of the situation in Eastern Europe and escalation of tension there will push oil higher and in turn keep appreciating bias limited.

Additionally, U.S. bond yields strengthened further pushing dollar higher amid aggressive rate hikes by the U.S. Fed and could keep appreciating bias capped.

At the same time, we could witness the local unit getting help from foreign-currency inflows this week, which is generally witnessed towards at the end of the financial year.

However, month-end import demand from oil refiners will keep appreciating bias limited.

So, the Rupee could open around at 76.25-76.30 vs a close at 76.20 on Friday.

Meanwhile NDF is at 76.25/31 this Monday morning vs a close at 76.19 close on Friday.

Technically, if the USDINR Spot pair trades below the 21-Daily Moving Average at 76.26 level it could witness a bearish momentum up to the support zone at 76.07-75.90. however, a trade above could push the pair to the resistance zone at 76.40-76.50.

The U.S. Dollar is trading stronger this Monday morning in Asian trade.

Meanwhile, the Japanese yen resumed its slide on Monday morning, after the Bank of Japan stepped into the market to defend its implicit yield cap.

The Euro and the Pound Sterling also extended losses this Monday morning in Asian trade against the Dollar.

Technically, if Dollar Index trades above $98.80 it could witness a bullish momentum up to the resistance zone at $99.20-$99.45. However, a trade below could pull the Index to the support zone at $98.60-$98.45.

Source : Equity Bulls

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