By Raj Deepak Singh
Rupee depreciated in the previous week majorly on the back of strong dollar and fall in domestic indices. Meanwhile, drop in crude oil prices provided some cushion. Dollar index edged higher amid fears of a global economic slowdown and steep interest rate hike by the US Federal Reserve. US Federal Reserve decided to raise interest rates by 75 bps to a range between 1.50% and 1.75%. They projected raising it to 3.4% by year end, implying another 175 basis points of tightening this year. Further, dollar was supported by higher than expected US inflation readings.
We expect rupee to depreciate further this week till 78.70 amid strong dollar and persistent foreign funds outflows. However, investors will remain vigilant ahead of existing home sales data. Existing home sales in the United States is expected to decline from 5.61M to 5.41M in another sign the housing market is cooling, as higher home prices and mortgage rates have reduced buyer activity. USDINR (June) as long as it sustains above 77.80 it may rise till 78.70 this week.
For Monday, Rupee may continue with its depreciation mode amid strong dollar and weakness in domestic markets. Further, rupee may be pressurised by persistent foreign funds outflows. However, sharp downside may be prevented by falling crude oil prices. As long as USDINR (June) sustains above 78.00 it may rise further till 78.30 level.
(Raj Deepak Singh is an Analyst – F&O, Currency, and Commodities at ICICIdirect. The views expressed are the author’s own. Please consult your financial advisor before investing)
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