Rupee hits new high of 78.29 amid risk aversion in markets, continued FII selling and inflation fears

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The Indian rupee hit a new record high of 78.29 against the US dollar on Wednesday as continued outflows of foreign funds from financial markets, risk aversion in global equities and high crude prices put pressure on the market. local currency. The fall comes amid selling off in emerging market stocks and currencies ahead of US Fed Chairman Jerome Powell’s testimony to the US Congress later in the day. Foreign exchange analysts said the local unit was also hampered by heightened concerns over India’s inflation and current account deficit and high crude oil prices. The national currency had closed at 78.13 against the greenback in the previous session.

The impact of a weaker Japanese yen will weigh on the rupee

“The Indian rupee hit a new all-time low as risk assets reversed, foreign fund outflows and Asian currencies weaker, following the depreciation of the Japanese yen. The impact of a stronger Japanese yen Weakness will add pressure on Asian currencies and indirectly on the Rupee.Around the world, major central banks are turning hawkish to slow demand and curb inflation, which could translate into slower growth or even a recession in developed countries,” said Dilip Parmar, research analyst at HDFC Securities.

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“The short-term bias for USDINR remains bullish, following signals from other regional currencies and outflows of foreign funds. Spot USDINR has resistance at 78.85 and support will remain at 77.60,” a- he added.

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Rupee to remain volatile this week, may test 78.45 resistance level

Rahul Kalantri, VP Commodities, Mehta Equities, said: “The US Federal Reserve’s aggressive interest rate hike plans and continued FII selling are putting pressure on the rupiah. Widening trade deficits and rising crude oil prices are also limiting the rupiah’s gains. We expect the Rupee to remain volatile this week and may test its resistance level of 78.45.

“There has been selling pressure on key commodity prices as recession concerns have affected the demand outlook. This could become a strong positive for the Rupee if other fundamentals follow suit. Overall, the pair can be expected to trade in a range of 77.80-78.30 before giving a break either side,” said Amit Pabari, MD, CR Forex Advisors.

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USDINR will trade sideways but with a positive bias

“The rupiah fell to new all-time lows, especially as the dollar rose against its major crosses. The greenback rose ahead of the Fed Chairman’s testimony. The expectation is that the comment might be hawkish and that could support the Dollar at lower levels The Pound fell sharply after UK CPI in May came in line with estimates We expect USDINR to trade sideways but with a bias positive in the range of 77.70 and 78.50,” said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.

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