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Rupee Likely To Open Lower On Risk-off Moods - HDFC Securities 

Indian rupee expected to open steady around Monday’s level after International Monetary Fund (IMF) on Tuesday upgraded its gross domestic product (GDP) projection for India to a contraction of 8% in FY21 from an earlier estimate of minus 10.3%, saying there are encouraging signs of economic recovery in high frequency indicators. IMF also revised upward its projections for FY22 to 11.5% from 8.8% estimated earlier

IMF has projected the world economy to recover a little faster and grow at 5.5% in 2021 after contracting 3.5% in 2020.

On Monday, spot USDINR closed at 72.95 with loss of 2 paise following broad base dollar weakness. However, risk-off sentiments and selling by oversea investors could weigh on rupee ahead of January derivative expiry.

Asian stocks looked set for mixed start after their biggest slide in two months as investors mulled a slew of earnings reports amid worries over virus variants and hurdles to stimulus.

The dollar index steady around 90 levels as U.S. stocks were mixed ahead of a slew of earnings reports and the Federal Reserve’s rate decision Wednesday. Pound rose to its YTD high of 1.3746, and last quoted at 1.3730 amid broad dollar weakness and cross-related pound buying

The US Federal Reserve is due to announce results of its two day policy meeting on Wednesday. Market expects Fed to stick to its dovish tone to help speed the economic recovery. A dovish surprise would be to point towards plans of adding stimulus, while a hawkish risk would be suggesting that tapering discussions could be relevant in the coming months

USDINR

USDINR February futures formed small body candle suggesting consolidation near low.

Trading below short term moving averages and bearish formation of lower top lower bottom on daily and weekly time frames indicating continuation of down trend.

The pair has near term resistance at 73.53, the 20 SMDA and support at 73 followed by 72.75

We remain bearish in USDINR February futures and any bounce in the range of 74 to 73.50 considered as selling opportunity for target of 72.75.

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