IGI Logo

Rupee Outlook and Strategy

• The US dollar rallied yesterday on risk aversion in global markets. Market sentiments were hurt as investors worried about risk of recession with the Fed likely to raise interest rates well into next year and a batch of fresh disappointing economic data. US retail sales declined 0.6% in November while manufacturing activity in the Philadelphia region also contracted more than expected

• Rupee future maturing on December 28 depreciated by 0.30% yesterday tracking strong dollar and weak global market sentiments. Further, FII outflows weighed on the rupee

• The rupee is likely to depreciate today on the back of a strong dollar and risk aversion in global markets. Market sentiments were hurt as major central across the globe signalled that interest rates will go higher despite recessionary fears. Additionally, investors will remain cautious ahead of manufacturing and services PMI data across major countries to gauge the economic health. US$INR (December) is expected to trade in a range of 82.60-83.05

Euro and Pound Outlook

• The Euro slipped 0.51% yesterday mainly on the back of a strong dollar and risk aversion in global markets. However, a sharp fall was cushioned as the European Central Bank raised its benchmark interest rate by 50 bps in line with expectations and signalled that the bank will continue to increase rates to tame inflation. On top of this, the ECB said it would reduce its multitrillion euro bond holdings starting in March by €15 billion a month on average first. Additionally, ECB President Christine Lagarde said the bank could continue to increase rates in increments of 50 bps at its next two meetings and possibly after that

• The Euro is expected to trade with a negative bias, mainly on the back of pessimistic global market sentiments and strong dollar. Additionally, expectation of disappointing economic from euro area will hurt the single currency. Manufacturing and Services PMI data are likely to show that activity in both sector contracted. EURUSD is facing resistance near 1.0700 levels. As long as it sustains below this level, it may slip back to 1.0580 levels. EURINR (December) is expected to trade in a range of 87.70-88.50

• The pound plunged yesterday by almost 2% on the back of a strong dollar and weak global market sentiments. Further, the pound slipped after BoE delivered an expected 50 bps hike in interest rates as it battles to control inflation, which the bank said has now peaked. Further, the bank said it believes the UK economy is already in recession that will last for a prolonged period

• The pound is expected to trade with a negative bias, mainly on the back of risk aversion in global markets and a strong dollar. Additionally, expectations of disappointing economic from Britain will hurt the sterling. Manufacturing and services PMI data are likely to show that activity in both sectors contracted. GBPUSD is likely to slip back till 1.2100 level as long as it sustains below 1.2300 level. GBPINR (December) is expected to trade in a range of 100.60-101.30

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at https://secure.icicidirect.com/Content/StaticData/Disclaimer.html
SEBI Registration number INZ000183631

Above views are of the author and not of the website kindly read disclaimer