Rupee depreciated in the week amid unabated foreign fund outflows. Meanwhile, sharp downsides were restricted due to ease in crude oil prices Dollar index depreciated amid weak economic data and fall in US treasury bond yields. Further, dollar was pressurised by fears that the US economy could slide into recession. Federal Reserve Chair Jerome Powell said, higher rates are painful but are the means the US central bank has to slow inflation. Further he added, the Fed is not trying to engineer a recession to heel inflation but is fully committed to bringing prices under control even if doing so risks an economic downturn.
However, sharp downside was cushioned by hawkish comments from Christopher Waller. FOMC member Christopher Waller explicitly backed a 75 bps hike in July, mentioning that inflation needs to be reduced regardless of what is causing it. We expect rupee to depreciate further this week till 78.80 amid persistent foreign funds outflows. However, investors will remain vigilant ahead of major economic events from US like CB consumer confidence, GDP and Personal Income MoM data. Consumer confidence in the United States is expected to decline from 106.4 to 100 and Personal income is expected to decline from 0.4% to 0.3%
(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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