Below is the Quote on Rupee by Mr. Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services:
The year 2020 has been historically a tough year as pandemic came upon us with such an unexpected force. The volatility and uncertainty sparked by COVID-19 pushed USDINR to hit a record high of 76.90, but infusion of excess liquidity by both government and central bank across the global supported the risk appetite and reversed the uptrend in spot to 72.75.
With a viable vaccine, and new year being on the horizon there are also other challenges which the spot market will face. The coronavirus variant will continue to hit India’s exports in markets like Europe and substantially narrow the current account surplus. Also, there is a possibility that of a revival in US-China trade war as Joe Biden has pledged to continue enforcing actions against China. The stock market rally is sustainable until interest rates start to rise. Having said that, a desperate Brexit deal with rollout of an effective coronavirus vaccine will continue supporting the risk sentiments and keep USDINR bears active.
Until the global economy is capable of recovering at a rapid pace once COVID-19 is defeated, the upside risk to USDINR spot will remain intact. So even in 2021, as long as USDINR spot is trading above 72.75-73.00, the trend will be bullish with 74.50 being the key resistance. A break of 74.50 will open doors for 75.25 and then 76.30. While, a break of 72.75 will push the spot price to 71.50-72.00 zone.”
Above views are of the author and not of the website kindly read disclaimer