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Rupee Outlook and Strategy

• The US dollar retreated from its 20-year high despite risk aversion in global markets and hawkish statement from a Fed official. Further, CPI data showed inflation reached a new four decade high bolstering expectations that the Fed will continue its aggressive monetary tightening policy. The market now expects even a 100 bps rate hike in the upcoming meeting

• Rupee future maturing on July 27 depreciated by 0.05% yesterday amid a strong dollar, pessimistic global market sentiments and persistent FII outflows

• The rupee is expected to depreciate today amid strong dollar and risk aversion in global markets. Market sentiments are hurt as red hot inflation in the US stoked bets that the US Fed may have to raise interest rates much more than expected, even 100 bps. Additionally, consistent FII outflows and concerns on looming recession may hurt rupee. US$INR (July) is expected to trade in a range of 79.50-80.00

Dollar Index Vs US$INR

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