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Rupee Outlook and Strategy

• The US dollar slipped on Tuesday on a rise in risk appetite in global markets. Market sentiments improved after China said it would open its borders next month, bolstering hopes of a wider economic reopening. However, sharp downside was cushioned on surge in US treasury yields

• Rupee future maturing on December 28 depreciated by 0.20% yesterday amid a surge in crude oil prices and FII outflows. Meanwhile, sharp fall was prevented on weakness in the dollar and rise in risk appetite in global markets

• The rupee is likely to depreciate today mainly on the back of a surge in crude oil prices and risk aversion in Asian markets. Oil prices are rising on supply concerns after Russia signalled the possibility of a production cut and winter storms across the US affecting logistics and production of petroleum products. Further, persistent FII outflows will hurt the rupee. US$INR (January) is holding support near 82.75 level. As long as it sustains above this level, it may rise back to 83.20 levels

Euro and Pound Outlook

• The Euro appreciated marginally by 0.04% yesterday on the back of weakness in the dollar and optimistic global market sentiments. However, sharp upside was capped in the absence of any major economic data

• The Euro is expected to trade with a positive bias for the day amid a weak dollar. Further, gradual reopening of China by moving away from its zero Covid policy may provide a boost to the euro. However, sharp upside may be capped on lack of any major economic data. EURUSD is holding support near 1.0570 levels. As long as it sustains above this level, it may rise back to 1.0670 levels. EURINR (January) is expected to trade in a range of 88.30-88.90

• The pound depreciated by 0.33% yesterday on concerns over stagflation and as households and business face a cost of living crisis. Furthermore, UK markets remained closed for a public holiday. Meanwhile, weakness in the dollar and rise in risk appetite in global markets prevented further downside in the sterling

• The pound is expected to trade with a negative bias for the day amid risk aversion in global markets. Further, the pound may slip on fears that the UK economy is already in recession and will last for a prolonged period. However, sharp downside may be cushioned on weakness in the dollar. GBPUSD is likely to fall back till 1.1960 level as long as it sustains above 1.2100 level. GBPINR (January) is expected to trade in a range of 99.70-100.50

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