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Rupee

The rupee depreciated in the previous week on a strong dollar, rise in crude oil prices and persistent FII outflows. Further, the Indian currency slipped as the RBI kept its benchmark interest rates unchanged and maintained its accommodative policy stance

The dollar remained firm amid a rise in US treasury yields and enhanced economic data from the US. Further, the dollar gained on expectation that US Federal Reserve will accelerate its monetary tightening despite concerns over the new variant

We expect the rupee to depreciate further in the coming week on a strong dollar, consistent FII outflows and uncertainty over the economic impact of Omicron variant. Further, investors will remain vigilant ahead of manufacturing PMI data from major countries around world, outcome of major central banks monetary policy across globe, FOMC economic projections and inflation data from country. US Federal Reserve is likely to keep benchmark interest rates unchanged but more focus will on statement to get clues on future monetary stance and bank interest rate projections, the so-called dot-plot. US$INR (December) is expected to trade in a range of 75.40-76.40

GBPINR

The Euro depreciated marginally in the previous week on a firm dollar and divergence in monetary policy between the ECB and Fed. Further, a series of disappointing economic data from the euro area sparked concerns over the economic health of the region. Additionally, a pessimistic statement from the IMF chief economist added to downward pressure on the single currency

The Euro is expected to trade with a negative bias on a strong dollar. Further, expectations of disappointing economic data from euro area and divergence in monetary policy will hurt the single currency. Euro Area Manufacturing and Services PMI data are likely to show that activity in both sectors slowed down. Additionally, investors will remain cautious ahead of ECB’s monetary policy, where the central bank is forecast to continue with its easy money policy. The market will also focus on statements from the central bank to get hints on the future monetary stance

The pound appreciated in the preceding week on improved economic data from the country and hawkish statement from a BoE policymaker. However, sharp upside was capped on diminishing hopes of an interest rate hike in the December meeting. Further, UK Prime Minister Boris Johnson imposed tougher restrictions to curb the spread of the Omicron variant

The pound is expected to trade with a positive bias on expectations of improved economic data and easing of worries over dispute between the UK and France over fishing licenses. Further, investors will remain vigilant ahead of Bank of England’s monetary policy, where the central bank is likely to keep its benchmark interest rates unchanged. Any hawkish statements from the central bank will prove positive for the sterling. GBPINR (December) is expected to trade in a range of 100.10-101.10

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