The Indian rupee kicked off Friday on a somewhat lacklustre note, as one might say. According to Bloomberg, the currency depreciated by two paise to commence trading at Rs 85.88 against the almighty greenback. Just the day before, it had settled at Rs 85.86.
Reflecting on past performance, the rupee marked a rather infamous milestone on Thursday. It touched an all-time low of 85.94 against the dollar during that day’s trading. Not to be outdone, it also plunged to an earlier low of 85.846 after opening the day at 85.82 on Wednesday.
In the grand tapestry of global finance, India faces its share of challenges. “Foreign Institutional Investors (FIIs) withdrew a substantial Rs 10,587.17 crore yesterday and Rs 28,842 crore this month,” noted Amit Pabari, managing director of CR Forex Advisors. This behaviour underscores a prevalent theme of risk aversion. Concurrently, escalating crude oil prices are certainly not doing India’s current account deficit any favours.
Amidst these swirling market forces, the Indian rupee managed a slight appreciation to 85.8475, thanks in part to capital flows on Thursday. However, hopes of maintaining these gains seem fragile at best. Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, remarked, “With a more robust dollar index and increasing oil prices, the ‘buy dollars at dips’ strategy prevails.” Asian currencies held their ground as many awaited today’s NFPR data.
Considering all these variables, Pabari anticipates the rupee trading between 85.70 and 86.30. He foresees heightened volatility ahead of President Trump’s inauguration and subsequent policy announcements.
On a somewhat practical note, Bhansali expects the rupee to oscillate within the Rs 85.75 to 85.97 range today. Exporters are urged to remain vigilant for hedging opportunities. For importers, the advice is to purchase dollars when they dip or to set a stop loss at Rs 85.60.
The market’s ever-shifting dynamics require one to remain both attentive and nimble, as new developments are ever on the horizon.
