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Rupee Depreciates on Dollar Demands - HDFC Securities 

Rupee expected to open slightly higher as dollar demand satisfied on Tuesday. However, strength in dollar index could limit the upside of local currency in today’s session. Asian stocks look set for a cautious start after a dip in U.S. shares on concern that the delta variant is slowing the economic recovery.

Indian rupee tumbled by the most in seven weeks on increased dollar demand by local companies likely to meet import payments and dividend payout by a metal company. Spot USDINR rose 0.44%, most since July 19, to close at 73.43 on Tuesday.

Bonds fell after the central bank announced additional operations aimed at draining liquidity from the banking system. The 10-year G-Sec yields rise 2bps to 6.29% on Tuesday.

The dollar advanced against all of its Group-of-10 currency peers as appetite for riskier assets waned with U.S. stocks retreating from near-record highs and an index of commodities losing the most in two weeks. US Treasury yields jumped across the curve, pushing the long bond to back near 2%, while gold and WTI sank below $1,800 an ounce and $69 a barrel respectively

Futures turnover for the Japanese yen were the highest since March on global exchange as USDJPY is up 0.3% to 110.29, momentum is seen building on further move above 110.59, the July 23 high. Net of ~$700m of month-end hedges are booked at 109.97.

Pound hovers near 1.378 with minor losses as Prime Minister Boris Johnson announced a tax hike while Bank of England policy maker Michael Saunders said interest-rate hikes are likely to be limited.

USDINR

USDINR September futures retraced 23.6% of previous downward movement.

The pair is manages to close above short term moving averages but still having strong resistance at 73.75, the 200 days simple moving average.

Momentum oscillator, relative strength index of 14 days period exited from oversold zone with positive cross over indicating short covering rally.

The rise in price was well supported with volume suggesting strength in recovery. USDINR September futures likely to show 73.75 to 73.85 range before reversing towards 73 odd levels.

We believe short term upward price action while medium term trend remains down until USDINR September futures close above 74.40.

USDINR September Daily Chart

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