Rupee likely to stay rangebound amid lack of fresh triggers; unable to exploit lower dollar, treasury yields, oil prices
US Federal Reserve will not increase interest rates further and pivot to a rate cut early next year. Rupee is up only 0.1% this week against the US dollar, as compared with 1-2% rally in other Asian currencies. Also Read: The rupee, its fall, slight recovery and what the RBI did “The recovery in the domestic equities backed by foreign fund inflows and lower crude oil prices are providing support to the local rupee.
The rupee has been a stable currency among the Asian currencies as we know the central bank intervention is around 83.30 level and importers/hedgers demand is around 83 level," said Dilip Parmar, Research Analyst, HDFC Securities. However, the Indian currency has mostly been unable to take advantage of the fall in US Treasury yields, softer greenback and the drop in oil prices that hit four-month lows on Thursday. The 10-year US treasury yield dropped to 4.30% from 4.75% as the market anticipated the US Fed not to raise interest rate at the upcoming policy meeting in December.
(Exciting news! Mint is now on WhatsApp Channels Subscribe today by clicking the link and stay updated with the latest financial insights! Click here!) “The rupee has been trading in its own cloud by not reacting to global worries in expectations of better dollar inflows in the domestic bond market and ease of selling in domestic equities. We believe the rupee to hold the range of 83.00 to 83.30 for a few more days amid the absence of fresh triggers which push or pull from the said range," Parmar added. Meanwhile, data this week showed the US consumer price index being unchanged in October and the core rate was up 0.2%, weaker than anticipated.
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