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Rupee Outlook and Strategy

* The US dollar closed on a positive note yesterday amid risk aversion in global markets. Markets were roiled on concerns over high inflation and Fed’s path forward. Further, market participants remained cautious ahead of inflation data from US due Wednesday that could cement bets on Fed hiking rates by 75 bps again this month

* Rupee future maturing on July 27 depreciated by 0.12% yesterday on the back of a strong dollar, weak domestic market sentiments and consistent FII outflows

* The rupee is expected to appreciate today amid retreat in US dollar and sharp decline in crude oil prices. However, sharp gains may be prevented on risk aversion in the global markets and persistent FII outflows. Further, India’s CPI data showed inflation remained above 7% for a third consecutive month and stayed higher than RBI’s comfort zone. Additionally, investors will focus on inflation number from US that could influence Fed’s path for interest rate increases. US$INR (July) is expected to trade in a range of 79.40-79.85

Dollar Index Vs US$INR

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