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Rupee likely to appreciate amid retreat in dollar, strengthening Asian peers; USDINR to trade in this range

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The Indian Rupee is expected to appreciate against the US dollar on Friday amid retreat in dollar and strength in Asian, EM peers. Expectation that the US Fed might ease the aggressive pace of raising interest rates beginning December is also expected to pull back the American currency, lending support to rupee. The dollar index has dropped to around 110, down about 1.7% this week. In the previous session, rupee appreciated 34 paise against the US dollar as the greenback retreated from its elevated levels. At the interbank foreign exchange market, the local currency opened at 82.15 and witnessed a high of 82.14 before it finally settled at 82.47 against the American currency, registering a rise of 34 paise over its last close.

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Sriram Iyer, Senior Research Analyst at Reliance Securities

“Indian Rupee could start Friday with small gains as some weak US economic data raised expectations that the Fed might ease the aggressive pace of raising interest rates beginning December. Asian and EM peers appreciated on Friday morning trade and could also lend support to the local unit. So, the Rupee could open around 82.30 to 82.35 per dollar vs a close at 82.4900 and could trade in a broad trading band of 82.20 to 82.65 from an intraday perspective.”

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

“Rupee rose marginally in the opening session yesterday but then started comender pressure. Earlier inbthe week, dollar retraced fromnhigher levels after data released from the US came in weaker-than-expected. Data showed sales of new single family homes dropped in September and data for the prior month was revised lower. Yesterday, losses for the greenback were restricted after US advance GDP number showed the economy grew at 2.6% as compared to estimates of 2.3% growth.”

“Euro after advancing in the last few sessions witnessed some. Profit booking at higher levels after ECB raised interest rates for the third meeting in a row on and signaled an intention to start mopping up cash from the banking system to fight record-high inflation. Today, focus will be on the core PCE index number from the US. A higher number could extend gains for the dollar. We expect the USDINR(Spot) to trade sideways with a positive bias and quote in the range of 82.10 and 82.80.”

Amit Pabari, MD, CR Forex Advisors

“The RBI came up with an unscheduled policy meeting on 3rd November 2022- just after Fed’s monetary policy decision. After hiking by 50 bps on 30 September 2022, it will be interesting to see whether RBI comes up with a surprise hike or just discuss a reply to the government, explaining the reasons for its failure to contain inflation up to 6%. Surely, volatility will prevail in the USDINR pair. Meanwhile, the pair in NDF market was seen sharply jumping higher from 82.22 to 82.67 in less than an hour before settling near 82.40 levels.”

“The last time RBI had conducted a surprise meeting was in May 2022, it hiked by 40 bps. That time, in a knee-jerk reaction, we had seen Rupee appreciating to 76.22 but then it depreciated towards 77 as a surprise hike to tackle inflation showed concern regarding price rise. Thus, if RBI comes up with any such rate hikes, although the probability of the rate hike in this policy is hardly 30% as inflation is in good shape, then we could see a knee-jerk appreciating move, but eventually, it will depreciate . Overall, as long as 82-82.10 levels are holding, one can expect a rebound toward 82.80-83.00 levels.”

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Anil Kumar Bhansali, Head of Treasury, Finrex Treasury Advisors

“Most Asian currencies are up against the dollar while the dollar index is at 110.33. The US 10-year is lower at 3.91% as market expects US rate hikes to slow down from December. Oil is at $94.44 per barrel. Rupee is expected to open slightly stronger at 82.40 after yesterday the dollar was bought taking rupee from a high of 82.1350 to low of 82.50. The range for the day is expected to be 82.00 to 82.60. Exporters may sell $ near to 82.50 levels while importers may buy the dips in a narrow range market.”

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