Rupee expected to appreciate towards 82.80
The Indian rupee gained on Friday amid likely support from the Reserve Bank of India (RBI), but higher crude oil prices and strength in the dollar index restricted it to appreciate below 82.90.
The rupee is expected to face the resistance near 83.20 and move towards 82.90 amid softness in the US dollar and decline in US treasury yields.
The dollar index, which measures the value of the US dollar against a basket of six currencies, fell 0.2% to 105.10 on Friday. US Treasury yields also declined, with the 10-year yield falling 2 basis points to 3.25%.
The expectation of a pause in Federal Reserve interest rates in the September meeting may restrict the dollar index from going beyond 105.20.
Meanwhile, investors will be eyeing this week’s key inflation numbers, which may provide more clues for the future interest rate path.
If the US inflation data comes in higher than expected, it could boost the dollar and pressure the rupee. However, if the data comes in lower than expected, it could weaken the dollar and support the rupee.
Overall, the rupee is expected to appreciate towards 82.80, as long as it trades below 83.20.
Here are some additional factors that could affect the rupee in the coming days:
- The outcome of the US-China trade talks.
- The release of the minutes of the Federal Reserve’s July meeting.
- The release of India’s GDP data for the second quarter.
- The movement of crude oil prices.
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