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Below is views on Currency Update by Heena Naik, Research Analyst - Currency, Angel One Ltd

Speculators have had the most amazing time of the year. With so many dramatic events doing the rounds these days, rupee traders are in for a treat. After trading in a strict range, the Indian rupee is all set to fall in the coming days. Reason being – the Adani effect!

The Indian rupee behaved well during India’s Union Budget 2023, the US Fed's monetary policy, and even the RBI's monetary policy. The volatility was very well controlled, all thanks to the RBI, which intervened persistently to keep the currency on stable lines. However, the intervention is likely to get more rigorous in the coming days.

The Adani crisis has sparked a run-in local equity. It all started with the allegations made by the US investor Hindenburg Research, who stated that the conglomerate was engaged in a “brazen stock manipulation and accounting fraud scheme." Adani denied the allegations in a detailed 413-page response. However, it did not work. The Indian conglomerate has lost about $115 billion from its listed entities, representing well over half its value, in a fortnight of heavy selling.

In addition, there are talks doing the rounds of MSCI making big decisions in the coming days. MSCI is likely to cut the weightage in Adani Group companies in Feb & May Reviews. Apparently, MSCI has received feedback from a range of market participants concerning the eligibility and free float determination of specific securities associated with the Adani Group for the MSCI Global Investable Market Indexes. which means we may witness a huge outflow from the local system which in turn may impact the Indian Rupee.

Keeping the current factors in mind, USDINR Spot (CMP: 82.60) is likely to cross 83-mark soon and move towards 83.80 levels by end of Feb’23.

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