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Currency Outlook

Rupee depreciated yesterday amid month end dollar demand from importers and FII outflows. Meanwhile, sharp fall in rupee was prevented due to decline in crude oil prices and as dollar hovered near 5-month low after PCE price index data showed annual US inflation slowed further below 3% in November.

• Rupee is likely to appreciate today amid soft dollar and decline in US treasury yields. Yields nosedive as recent inflation data bolstered expectations that US Federal Reserve will start cutting rates next year as soon as March. Additionally, improved economic data, optimistic domestic market sentiments and softening of crude oil prices will aid rupee. India’s CAD narrowed to 1% of GDP in Q2 FY24 down from 1.1% in preceding quarter and 3.8% a year ago. USDINR Jan may slip towards 83.15 level as long as its stays below 83.40 level

Euro and Pound Outlook

• Euro moved up by 0.30% yesterday majorly on the back of weakness in dollar. Meanwhile, activity in trading was muted as European markets were closed for Boxing day holiday. For today, EURUSD is likely to rise further towards 1.1060 level as long as it trades above 1.1000 level amid soft dollar and rise in risk appetite in the global markets. EURINR Jan may rise towards 92.00 level as long as it trades above 91.50 levels.

• Pound is likely to edged higher towards 1.2760 levels amid expectation of further weakness in dollar and optimistic global market sentiments. Meanwhile, disappointing economic data from Britain prompted investors to bring forward bets on when BOE will start cutting rates. GBPINR Jan is likely to move north towards 106.10 level as long as it stays above 105.40 levels

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