A weaker-than-expected economic data could reduce the weight of the currency on Thursday, brokerage firm Motilal Oswal said in its report. For today, it is expected that USDINR (Spot) will trade sideways with a positive bias and quote between 77.20 and 77.80.
Today, May 27 USDINR futures traded positive at 77.64 in the opening trading session and rose 0.3 percent or 23 paise from the previous close of 77.41.
Trading Strategy: Motilal Oswal May 27 USDINR futures sell at 76.50 PE. It also suggests selling EURINR futures on May 27 when buying GBPINR futures.
The rupee traded in a narrow range after hitting a new all-time low earlier this week. “On the domestic front, market participants were cautious ahead of the significant inflation numbers released today,” the report said.
The number is expected to be even higher and could be quoted above 7 percent after rising food and energy prices, the report said.
In addition to inflation, industrial production numbers will also be revealed and could have an impact on the rupee, it added.
On Wednesday, the dollar continued to rally against its main cross after the US CPI fell to 8.3 percent for April, above the 8.1 percent estimate but below the previous month’s 8.5 percent. The major cross came amid euro and pound pressure and is likely to take signals from the UK GDP numbers in today’s session, the report said.
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The Indian rupee saw gains and losses on Wednesday, said Praveen Singh, assistant vice president (AVP), BNP Paribas, a fundamental currency and commodity analyst at Sharekhan.
That was behind the U.S. 10-year yield coming back below 3 percent, he added.
“The sense of risk is positive because China has filed less cowardly cases. Shanghai reported 51% fewer cases yesterday, giving investors some optimism about the possibility of easing the lockdown in China. “
“There are also reports of RBI interference in futures markets. The fall in crude oil prices over the last few sessions has also supported the rupee at lower levels. The dollar is depreciating from higher levels in positive Asian and European markets and US Treasury yields have declined. However, risk aversion in the domestic market and sustainable FII outflows are limiting sharp gains in the domestic currency. In the seventh consecutive session on Tuesday, FIIs were net sellers and sold assets worth around Rs. 3960 crore. Net FII inflows stood at Rs 20,055 crore in May, ”he added.
Amid concerns over the US Federal Reserve and the global economic downturn, the domestic currency is expected to trade less on sustainable FII outflows, although recent crude oil prices and further RBI intervention could support the rupee at lower levels.
The rupee could trade in the 76.50-78.20 range in the next few sessions, he opined.
Meanwhile, another analyst Anuj Gupta recommended buying USDINR futures on May 27 at Rs 77.30 with a stop loss of Rs 77 and a target of Rs 77.80. He said the rupee is expected to trade lower against the greenback in the near future.
Gupta, who is also the Vice President (VP) of IIFL Securities, sees support at Commodity and Currency Research 77.20 / 77 and resists at 77.60 / 77.90 and expects a sideways movement today.
(Disclaimer: The opinions / suggestions / suggestions published here in this article are by investment experts only. Zee Business advises its readers to consult their investment advisors before making any financial decisions.)