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Currency Outlook

Rupee Outlook

• Rupee depreciated yesterday amid dollar demand from importers and FII outflows from equity markets. Further, rise in crude oil prices weighed on domestic currency

• Rupee is likely to appreciate today amid weakness in dollar and decline in US treasury yields. Dollar is showing weakness as soft economic data from US raised the bets that US Fed is done with its tightening cycle and will hit a pause button at next month’s policy meeting. US Private payrolls rose less than expected in August and US economy grew at a slightly less brisk pace than initially estimated in Q2 2023. Additionally, all eyes will be on personal consumption expenditure to get new clues on interest rate outlook. US$INR is likely to slip towards 82.45 level as long as it stays below 82.70 level

Euro and Pound Outlook

Euro ended on positive note amid soft dollar and on signs of sticky inflation in Germany and Spain. Additionally, hawkish comments from ECB Governing council member De Cos supported single currency. For today, EURUSD is likely to rise further towards 1.0970 level as long as it trades above 1.0890 level amid weakness in dollar and rise in European government bond yields. Further, sticky inflation expectation in Europe will bolster hopes that ECB may not conclude its tightening cycle in the near future. EURINR may move north towards 90.80 level as long as it stays above 90.00 levels

• Pound is expected to hold support near 1.2680 level and strengthen towards 1.2760 level on soft dollar and optimistic global market sentiments. Additionally, money markets show traders expect roughly 2 more 25bps rate hike this year and rates to peak around 5.8%. GBPINR is likely to rise towards 105.70 level as long as it trades above 104.90 level

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