By Rohit Vaid
New Delhi, Dec 20 : Persistent foreign fund inflows on the back of bullish global cues will strengthen the rupee during the upcoming week, analysts said.
Besides, lesser intervention from the Reserve Bank of India is expected after it was called out by the US Treasury Department to curtail its market activities.
“RBI intervention is keeping the rupee stable, as it feels prudent to insulate rupee from the strong capital inflows. US Fed putting India on watch list is expected to reduce pace of intervention going forward. Expect rupee to trade between 73.20 to 73.60 with appreciative rupee bias,” said Sajal Gupta, Head, Forex and Rates, Edelweiss Securities.
Lately, healthy FIIs inflows have powered a rally in equities and gave an appreciation push to the rupee. The FIIs were net buyers last week, investing around Rs 12,000 crore in the equity segment.
However, Reserve Bank’s interventions to build-up India’s forex reserves have arrested any sharp appreciation in the rupee.
“Vaccine optimism and hopes surrounding a US covid rescue package have lifted risk appetite. The rupee is trading near its short term support of 73.4. Reserve bank’s interventions will now leave much room for appreciation from here in the coming week. 74.1 remains a strong short term resistance for the USDINR pair,” said Devarsh Vakil, Deputy Head of Retail Research at HDFC Securities.
Furthermore, investors are euphoric as a couple of anti-Covid vaccines have got regulatory approval. Additionally, expectations of further US stimulus is keeping the US dollar under pressure.
“Until there’s some clarity over the US stimulus package and Brexit deal, the USDINR spot will continue to trade within 73.25-74. Currently, the spot is holding the strong support of 73.50, but with broader vaccine optimism we can expect a fall towards the 73.25 zones, while 73.75-74 will continue to act as a strong resistance,” said Rahul Gupta, Head of Research-Currency at Emkay Global Financial Services.
According to Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services: “Weaker-than-expected economic data from the US could keep the dollar weighed down against its major crosses. For the USDINR(Spot) pair, we expect it to trade with a lower bias and quote in the range of 73.20 and 74.05.”
(Rohit Vaid can be contacted at email@example.com)
Disclaimer: This story is auto-generated from IANS service.