The rupiah should remain stable in a context of a strong dollar and risk aversion in the markets; USDINR will trade sideways

The Indian rupee is expected to remain sideways on Friday amid falling crude prices, risk aversion in global equity markets and a strong dollar. USDINR has resistance at 79.90 and 80.15, while support has moved to 79.40 from 79.05, analysts say. In the previous session, the rupiah fell on strong demand for US dollars from oil companies, as markets braced for a big rate hike from the US Federal Reserve next week. The strength of the US currency and the negative trend in domestic equities weighed on the currency. In the interbank foreign exchange market, the local unit opened at 79.53 to the dollar and stabilized at 79.73, down 21 paise from its previous close.

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Gaurang Somaiya, Forex and Bullion Analyst, Motilal Oswal Financial Services

“On Thursday, the Rupee consolidated in a narrow range and volatility remained low even after the US and UK inflation numbers topped estimates. The Dollar was slightly higher following of data showing U.S. retail sales unexpectedly rebounded in August But dollar gains were limited as July data was revised down to show retail sales fell instead of stagnating as The greenback was supported by the view that the Fed will continue to tighten policy aggressively.

“The yen was under pressure after a record Japanese trade deficit in August. The fall of the yen by almost 20% over the past six months has increased import costs, adding to already high energy and raw material costs. The market remains choppy knowing that there is a Fed meeting next week. Even though market participants agree there could be a 75 basis point rate hike, that’s what the statement adds to previous comments and what Chairman Powell said in his press conference. We expect USDINR (Spot) to trade sideways and range between 79.40 and 80.05.

Dilip Parmar, Research Analyst, HDFC Securities

“The Indian rupee could fall on weak transfer from abroad. Overnight, we saw risk averse moods after a mix of US economic data that supported the hawkish monetary policy view. US swap traders are currently pricing in a 75 basis point rally at the Fed meeting next week.The weakness in the Chinese Yuan crossing the 7 could also weigh on other regional currencies.

“Asian stocks headed for the fifth week of declines on the back of greater weakness in US equities and a surge in short-term Treasury yields that reflected expectations of outsized interest rate hikes from The Federal Reserve USDINR spot gained 26 paise to 0.33% on Thursday at 79.79 and is heading for the first weekly gain after two weeks of declines The technical pattern turned bullish after the last two days of action The pair has resistance at 79.90 and 80.15 while support has moved to 79.40 from 79.05.

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Amit Pabari, MD, CR Forex Advisors

“Inflation in the United States and its strong consumer and labor markets support the Fed’s aggressive rate hike decision at the upcoming September 21 policy meeting. Markets have fully priced in the possibility of a 0.75 basis point hike, while the top 30% sees a full percent increase in rate hikes starting today, supporting the strength of the US dollar and pushed US 10-year yields to 52 weeks. raised yesterday. Here, the rupiah’s recent strong appreciation near the 79.00 levels was quickly erased back to levels near 79.80.

“It could be the influence of the strong dollar, weaker sentiments or the Chinese Yuan weakening beyond 7.00, all negative factors weighing on the Rupee. The next move towards 79.95 and 80.10 is essentially the RBI’s game as one needs to be cautious with the central bank’s intervention the last two times.For now, the 80.10 level remains a strong resistance for the USDINR pair, which has not been unable to break many times in the past although it has put the rest of the currencies down. The breakout of 80.10 could invite another upside move of 50 paisa against 1 rupee. On the other hand, 79.00 remains strong support for the pair.

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