A strengthening U.S. dollar pushed the rupee to the edge ahead of the announcement of the monetary policy by the Reserve Bank on Wednesday.
The rupee on Tuesday fell 65 paise against the U.S. dollar to 82.50.
“Rupee continues to remain under pressure as the dollar strengthened against its major crosses,” said Gaurang Somaiya, forex & bullion analyst, Motilal Oswal Financial Services. “Strength in the dollar is one of the major factors that is triggering a move in the major currencies including the rupee,” he said.
“Focus will be on the RBI policy statement; expectation is that central bank could raise rates by another 35 bps,” he added.
“We expect the USDINR (Spot) to trade sideways and quote in the range of 82.20 and 82.80,” he further said.
Anindya Banerjee, VP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities Ltd. said: “Once the spot crossed 82, stops may have been triggered of importers and bank dealers and that accentuated the rise.”
“USDINR forward premium is trading at the lowest levels since 2011 and low forward premiums are hurting dollar supply. It is making carry trade unviable and also reducing exporter hedging,” he said.
“At the same time, it is making rupee vulnerable to global shocks. The rupee has become one of the weakest currencies across a broad basket of currencies on a year-to-date basis,” he added.
“However, over the near term, we expect central bank intervention to emerge at higher levels and as a result, a range of 81.80 and 83.00 may unfold over the near term,” he further said.
