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Currency Outlook

Rupee Outlook

* Rupee depreciated yesterday amid weak domestic market sentiments and FII outflows. Further, rupee ended weaker due to sustained dollar demand from state run and foreign banks

* Rupee is likely to appreciate today amid weakness in dollar and softening of US treasury yields. Dollar has lost its steam after recent batch of economic data showed that economy is feeling heat of aggressive rate hike, cementing expectations that US Fed is done with raising interest rates and could opt for rate cut by May 2024. Meanwhile, sharp gains may be prevented on weak domestic market sentiments, FII outflows and re-bounce in crude oil prices. Additionally, investors will remain cautious ahead of FOMC meeting minutes. USDINR may slip to 83.20 level as long as its stays below 83.45 levels

Euro and Pound Outlook

* Euro rallied by 0.29% yesterday amid weakness in dollar and improved domestic market sentiments. Further, hawkish comments from ECB Governing Council member Wunsch supported single currency. He said ECB may have to raise interest rates again if overly dovish market expectations undermine the ECB’s policy stance. For today, EURUSD is likely to rise further towards 1.100 level as long as it holds the support near 1.0910 level amid soft dollar. Meanwhile, investors will remain cautious ahead of ECB President Lagarde speech for cues on interest rate outlook. EURINR may rally further till 91.75 as long as it trades above 91.00

* Pound is likely to move north towards 1.2600 level amid weakness in dollar and rise in gilt yields after Prime Minister Rishi Sunak said his government would turn to cutting tax after a fall in inflation. GBPINR is likely to move higher towards 104.80 level as long a it stays above 104.

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