The Indian Rupee is likely to appreciate on Friday amid recovery in Asian currencies, weakness in dollar and rise in risk tolerance in global markets. However, spike in crude oil prices will cap gains. In the previous session, rupee settled at its all-time low at 78.32 against the US dollar at the interbank forex market on the back of a strong greenback and consistent foreign funds outflows offsetting the impact of gains from domestic equities. As long as crude oil prices stay above $95 per barrel, the domestic currency is expected to be vulnerable. At the exchange market, the rupee opened at 78.26 per dollar and the weakening continued till it closed at an all-time low of 78.32 per dollar muted from its previous close.

Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services

“Rupee fell to fresh all time low as the broader strength in the dollar continued after the Fed Chairman in his testimony sounded hawkish. In another day of testimony the Fed Chairman mentioned that the Federal Reserve’s commitment to reining in 40-year-high inflation is “unconditional”. On the other hand, Euro fell against the US dollar after weaker-than-expected German and French PMI data showed that the euro zone economy is struggling to gain traction. Today, focus will be on the consumer sentiment number that will be released from the US; better-than-expected economic data could continue to extend gains for the currency. We expect the USDINR(Spot) to trade with a positive bias and quote in the range of 77.70 and 78.50.”

Anindya Banerjee, VP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities

“USDINR June futures closed 5 paise lower at 78.30, in lackluster trading. The central bank may have been on the offer. Drop-in spot and rise in forwards could be a sign of a central bank selling in spot and buying the forwards. They have done that in the past. As a result, USDINR continues to be in the firm grip of the central bank. If we do not see much volatility today morning, we would look to sell weekly straddles or strangles for the weekend. Key levels: 77.90/78.00 remains a strong zone of support. Resistance levels are hazy as to where ever RBI manages to absorb the demand, USDINR will exhaust its upward move.”

Amit Pabari, MD, CR Forex Advisors

“Sustained FII capital outflows and aggressive Fed rate hikes is unnerving investors and calling out for further rupee depreciation. However, RBI keeps firm with its cushions as it intervenes in to the forward markets. Falling forward premiums has overall negated the effect of the rising spot as one year annualized forward rate still remains intact as it was when USDINR traded close to 77.80. Thus benefiting the importers to hedge longer and exporters to take rising spot benefit.”

“RBI is so far trying to hold the heavy impact of the global repercussions on the currency but how long and to what extent it does, remains a question as emerging market currencies have a fate to witness the storm arriving out of the heavy outflows. Overall, for the rupee the 78.50 levels is still protected in spot markets as the global markets lack direction. However, the trend for rupee depreciation gets confirmed longer the rupee keeps trading above 78.00 levels. Overall, the range between 78.00-78.50 remains crucial to understand further moves in the currency.”

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