MUMBAI: The Indian rupee is tipped to open little changed against the US dollar on Monday, with traders assessing the outlook for the local currency after a difficult year.
The rupee is expected at around 82.70-82.75 per dollar at the open, compared to 82.72 in the previous session. It tumbled 11.2% last year.
The currency traded in a narrow range in the last three weeks of 2022 and traders reckon that volatility is likely to pick up later this month.
These kinds of rangebound moves do not last too long and when the breakout happens, it can be quite sizeable, a trader at a Mumbai-based bank said.
We anticipate an increase in volatility later this month on new positions and flows and before India’s budget, the trader said.
India’s union budget will be presented on Feb. 1.
Indian rupee ends down more than 10% in 2022, worst since 2013
At the open, the rupee will have to contend with the 3% jump in Brent crude futures on Friday.
Oil prices swung wildly in 2022, climbing on tight supplies amid the war in Ukraine initially, then sliding on weaker demand from top importer China and worries of an economic contraction.
The dollar index was little changed, at around 103.5, to begin the week.
While the index rose 8% in 2022, it ended well off its highs of above 114 on expectations of a less hawkish stance by the US Federal Reserve stance. Data this week will help traders reassess the Fed’s outlook on interest rates.
US ISM manufacturing data is due Wednesday, followed by the services and the important jobs print on Friday.
Futures have currently priced in that the Fed rate will peak around 5% and will be followed by rate cuts later this year.
For the USD/INR, the 83.00-to-83.20 zone is seen as a near-term top and any rise in spot prices is a good opportunity to sell for exporters, said Amit Pabari, managing director at CR Forex.
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