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Rupee Outlook and Strategy

• The US dollar continued its rally as CPI data showed inflation remained elevated due to skyrocketing energy and food costs. US inflation accelerated to a new four-decade high of 8.5% in March. Additionally, the dollar strengthened further after Federal Reserve Governor Brainard said the central bank is still proceeding with a series of rate hikes as well as an effort to trim its balance sheet

• Rupee future maturing on April 27 depreciated by 0.28% amid strong dollar, risk aversion in global markets and persistent FII outflows

• The rupee is expected to depreciate today on the back of firm dollar and weak global market sentiments. Market sentiments are hurt as elevated inflation in US kept aggressive monetary tightening bets alive. Additionally, disappointing economic data from India and surge in crude oil prices will hurt the rupee. India’s CPI data showed inflation breached RBI comfort zone for a third consecutive month as it spiked to 6.95% in March. US$INR (April) is expected to trade in a range of 76.00-76.45

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