Rupee Vs Dollar: Where Indian currency is headed? Experts speak

Rupee vs Dollar: The Rupee has been staggering since the beginning of the year. As of now, the Rupee is oscillating between 81-83 levels. With a sharp decline in a year, brokerages are now seeing signs of recovery and have revised the ratings.

Brokerages have predicted the Indian currency to strengthen by December 2022:

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Expert’s opinion 

What are factors contributing to strengthening the Rupee?

According to Gaurang Somaiya, Forex Analyst, Motilal Oswal, there are many factors that are contributing towards the Rupee strengthening like the stance of the US Fed, India’s inflation number coming lower than expected, inflation related concerns decreasing in India, and the Reserve Bank of India (RBI) actively taking steps to curb the volatility.

“We are seeing a change in the stance of the US Fed, inflation number that has come from the USA was slightly below estimate, the number has come to a 7.7 per cent (October) as compared to 8.2 per cent (September), quite a bit of surprise on the downside and since then we have seen Dollar index correcting sharply from the level close to 112 we are close to 106/107 at present,” Gaurang explained.

On the domestic front, he said that inflation related concerns are dying down as India is expecting a lower interest rate hike. “Indian market was expecting a 1 per cent rate hike until the end of next financial year i.e. March 2023, but now they are expecting a 50-day rate hike could happen which is good for India in a way as inflation related concerns are dying down in India. Obviously, India was in a much better place as compared to the other economies in terms of inflation. I think that should be supportive for the Indian currency.” 

Active steps from RBI to curtail the volatility is another factor, said Gaurang. “Third reason is in terms of reserves, we have seen that RBI has been actively intervening to curtail the volatility that again will be there. Even if the dollar starts strengthening again. RBI is there to curtail a lot of weakness of the Rupee.”

According to Anuj Gupta, Vice President, IIFL Securities, "If crude oil prices decline it will be a good sign for the Indian currency. If crude oil prices cool off that will impact India's import basket, which will be good for the Indian Rupee.” 

Expert’s outlook on Rupee 

Motilal Oswal expects the Rupee to hold 81 level by December 2022. “On the broader range, we are expecting 82.20- 82.50 levels on the higher side and on the lower side 80.80 to 80.50 is the support so the average number comes to 81- 81.20,” Gaurang Somaiya said.

Vice President, IIFL Securities, Anuj Gupta expects the Rupee range to be between 81 to 82, “Rupee will appreciate and will be in range between 81 to 82.”

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