The rupee appreciated by 12 paise to 82.08 against the US dollar in early trade on Friday mostly because of foreign fund outflows. On Thursday, the rupee closed at 82.20 against the US dollar, down 40 paise over its previous close, due to heavy foreign fund outflows and corporate dollar demand.
On Thursday, the rupee opened at 81.81 against the greenback, and touched an intra-day high of 81.71 at the interbank foreign exchange market, a PTI report said. It finally settled at 82.20. The domestic currency has been under pressure and has crossed 82 per dollar levels in the past two sessions, even after seeing gains after a positive budget on Wednesday. Reuters reported that outflows by foreign institutional investors are negative for the rupee, whereas the weakness in the dollar to multi-month low works well for the domestic currency.
On Wednesday, the rupee appreciated 8 paise to close at 81.80 against the dollar after Finance Minister Nirmala Sitharaman presented the Union Budget for 2023-24.
Earlier today, Rahul Kalantri, Vice-President Commodities, Mehta Equities Ltd, said: “The USD-INR 24 February futures contract settled positively in a highly volatile session. On the daily technical chart, the pair is trading above its trend-line support level of 81.65. MACD is showing positive divergence on the daily technical chart and RSI is also fetching above 50 levels. As per the daily technical chart, we observed that the pair is trading above its trend-line support level of 81.50. Looking at the technical set-up, RSI is fetching above 50 levels and the pair has formed a “bullish engulfing” pattern on the daily technical charts. The pair crossed 81.85 levels on a daily closing basis and is showing strength. We expect it could test its resistance level of 82.55-82.70 levels; support is placed at 82.10-81.85 levels.”
Rupee to perform better
On Thursday, Chief Economic Advisor V Anantha Nageswaran said that the Indian rupee is expected to be under far less pressure than it was in 2022, as a global economic slowdown will mean a potentially weaker dollar and lower commodity prices which would lead to lower imports.
In 2022, the domestic currency dipped 10.14 per cent, which was its biggest loss since 2013. The rupee was the second worst-performing Asian currency mainly due to the US Federal Reserve's aggressive rate hikes battered emerging market currencies and boosted the dollar.
But recessionary fears in western economies are expected to lead to a dovish stance from the Fed in 2023, helping other currencies to stabilise against the dollar.
Last month, the International Monetary Fund said global growth in 2024 would accelerate slightly to 3.1 per cent as the full impact of steeper central bank interest rate hikes slows demand globally.
(With agency inputs)