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Rupee may weaken on global recovery concerns, US polls
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SME Times News Bureau | 31 Oct, 2020
Fears of a slower global recovery due to rising cases of Covid-19
infections in Europe and the US will cast pressure on the Indian rupee
next week.
Additionally, the rupee is expected to get weaker on
account of uncertainties prevailing on the back of upcoming US
Presidential Election which will be held on November 3.
"The
continuation of the pandemic in absence of a vaccine is creating havoc
and is playing out in the Fx market. The fear that economic conditions
are going to get worse before they get better, is keeping the dollar
strong against EM currencies," said Rahul Gupta, Head of
Research-Currency at Emkay Global Financial Services.
"Adding to
this mood is the uncertainty of the US presidential election outcome.
So, next week the chances of USDINR trading above 74 are higher and
expect the spot pair to trade within 73.50-74.50."
The Indian rupee closed last week at 74.11, its weakest level in two months.
"Next
week, US elections will take centrestage. Democratic candidate, Joe
Biden is projected to win the race comfortably based on the current
polls and leads. Also based on the current polls there is a likelihood
the democrats could win both the House and Senate. This will be huge
blue sweep for the and that will drive policy changes," said Devarsh
Vakil -- Deputy Head of Retail Research at HDFC Securities.
"Their
stated economic positions suggest that dollar could weaken in the
medium term, which could drive commodities and emerging market equities
higher."
Besides, major economic data points such as automobile
sales figures for October and 'Purchasing Manager Index' will further
guide the currency's movement.
The foreign fund inflows into the
country's equity markets are greatly influenced by these macro data that
show the health of the economy.
Consequently, the flow status of foreign funds also impacts the rupee's movement.
According
to Sajal Gupta, Head, Forex and Rates, Edelweiss Securities: "Just
before US elections rupee and equity became wobbly and some people may
have booked profits before the event. Rupee has weakend to 74.50 levels.
It has traded comfortably above the 74 handle."
"Expect the rupee to be volatile and trade in wider range of 74 to 75.20 with some more depreciation risk."
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Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
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66.20
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64.50 |
UK Pound
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87.50
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84.65 |
Euro
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78.25
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75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
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