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Rupee Outlook

• The US dollar rose 0.27% yesterday as recent job data was seen solid enough to keep the Federal Reserve tightening path intact. The market expects the US Federal Reserve to be more aggressive in tightening monetary policy to tame stubbornly high inflation

• Rupee future maturing on January 27 appreciated by 0.38% on a rise in risk appetite in domestic markets. However, further gain was prevented on elevated crude oil prices and strong dollar

• The rupee is expected to depreciate on a firm dollar and risk aversion in global markets. Further, the rupee may slip on elevated crude oil prices. Furthermore, the market expects the US Federal Reserve to be more aggressive in tightening monetary policy, which may prompt foreign investors to pump out liquidity from emerging markets. Additionally, investors will remain vigilant ahead of US Federal Reserve Chairman Jerome Powell’s testimony for clues on timing and speed of rate hikes

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