Image used for representational purpose only. (File Photo)
Image used for representational purpose only. (File Photo)

Rupee may breach 83/USD level this week on rising oil prices, hawkish Fed stance

Indian rupee is soon expected to breach the 83 per US dollar mark on account of rising oil prices and US Federal Reserve’s hawkish stance on future key interest rate hikes.

NEW DELHI: Indian rupee is soon expected to breach the 83 per US dollar mark on account of rising oil prices and the US Federal Reserve’s hawkish stance on future key interest rate hikes. “The rupee hit fresh record lows on rising oil prices, if the oil again jumps above USD 100 per barrel it will surely ring alarms and further stress the deficits and the rupee.

Also, weakness was seen as Fed members continued to sound hawkish with two latest speeches by Fed Chair Jerome Powell signalling that the central bank is likely to raise rates in 2023 also,” said Rahul Kalantri, VP of Commodities, Mehta Equities.

He added, “This will boost borrowing costs for banks and corporates, which could weigh on economic growth. The RBI has so far intervened sporadically in the market, to taper volatility, and may see further intervention also, we expect the USD-INR pair to trade higher in a range of 81.80 to 83.50 for this week.”

The rupee on Monday pared most of its initial losses and settled 4 paise lower at 82.32 per dollar after the RBI likely to have intervened in the markets.

It had fallen to a record low of 82.6825 in early trades. RBI’s regular exercise to sell dollars in the open market to check Rupee’s freefall is depleting its forex reserve at a fast pace: a 16 per cent fall in September-end compared to the beginning of the year.

Meanwhile, crude oil prices hovered near USD 97 per barrel on Monday, a surge of about 10 per cent this month alone after OPEC decided to cut output. The dollar index, which gauges the greenback's strength against a basket of 6 currencies, climbed above 113-levels.

“Looking at the tighter dollar liquidity, hawkish global central banker and foreign fund withdrawal, the rupee is expected to trade left against the dollar. Spot USD/INR is having near-term resistance at 82.90 and crossing of the same would pave way for 83.50 while on the downside it could find support around 81.35,” Dilip Parmar, Research Analyst, HDFC Securities.

India’s equity markets too opened with sharp cuts but recovered gradually, supported by IT heavyweights. The Sensex dropped 200.18 points to end at 57,991.11, while the broader Nifty fell 73.65 points to 17,241.00.

The rupee fell to low of 82.6825 in early trades
The rupee on Monday pared most of its initial losses and settled 4 paise lower at 82.32 a dollar after RBI is likely to have intervened in the markets. It had fallen to a record low of 82.6825 in early trades. RBI’s regular exercise to sell dollars in the open market to check the rupee’s freefall is depleting its forex reserve at a fast pace

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