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Rupee Outlook and Strategy

• US dollar rallied amid sell-off in US markets. Further, CPI data showed inflation eased a bit but unlikely to cool down quickly and derail Fed plan to tighten monetary policy aggressively. Inflation edged down to 8.3% in April from 8.5% annual rate in March but remained above the 8.1% expectation. Additionally, hawkish statements from Fed officials supported dollar

• Rupee future maturing on May 27 appreciated by 0.05% amid flat dollar. However, sharp gains were prevented on weak domestic markets and persistent FII outflows

• Rupee is expected to depreciate today amid risk aversion in the global markets and strong dollar. Further, rupee may slip on persistent FII outflows and surge in crude oil prices. Additionally, market participants will remain vigilant ahead of CPI data from country which is likely to show that inflation remained above RBI comfort zone for 4 th consecutive month. US$INR (May) is expected to trade in a range of 77.25-77.75

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