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Accommodative stance, mega US infra plan to strengthen rupee
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SME Times News Bureau | 04 Apr, 2021
A mega US infrastructure creation programme along with likely retention
of key lending rates and an accommodative stance by the Reserve Bank are
expected to boost the rupee's prospects during the upcoming week.
Accordingly,
US President Joe Biden recently announced a '$2 trillion plus job
plan', including $621 billion to rebuild infrastructure.
If passed by the US Congress, the plan will add pressure on the dollar against all the EM currencies including the rupee.
"Another
US stimulus may keep equities buoyant and the rupee strong," Sajal
Gupta, Head, Forex and Rates at Edelweiss Securities told IANS.
"Expect the rupee to trade between 72.90 to 73.60 during next week."
Last week, the rupee closed at 73.11 per US dollar.
"The
last trade week was very volatile for the forex market, especially on
speculating trading ahead of Biden's additional stimulus," said Rahul
Gupta, Head Of Research- Currency, Emkay Global Financial Services.
"Biden
announced his long-awaited $2 trillion-plus job plan, including $621
billion to rebuild infrastructure. This new package would certainly be a
big positive for the US economy if passed by Congress."
Furthermore, Gupta cited that some profit-booking has led to a fall in dollar gains.
"For next week, we expect USDINR spot to trade in between 72.50-73.50."
Besides,
the Reserve Bank's MPC is expected to retain key lending rates and an
accommodative stance during the first monetary policy review of 2021-22.
"Next
week, market participants will be keeping an eye on the RBI policy
statement; expectation is that the central bank could keep rates
unchanged and wait for some more time before taking any action to spur
growth," said Gaurang Somaiya, Forex & Bullion Analyst, Motilal
Oswal Financial Services.
"The RBI is likely to continue with the
accommodative monetary policy stance and wait for an opportune time to
announce monetary action with a view to ensure the best possible outcome
in terms of pushing growth without sacrificing the main objective of
containing inflation."
On the other hand, rising Covid cases will add pressure on the rupee.
Lately,
a new wave of Covid-19 infections has hit several states. This comes at
a time when India is trying to ramp up the vaccination drive.
"RBI's
interventions in currency markets and spread of virus and pace of
inoculations and global risk appetite will determine fate of the
currency this week," said Devarsh Vakil- Deputy Head of Retail Research
at HDFC Securities.
"We expect it to gradually depreciate compared to greenback over the next few weeks."
The RBI is known to enter the markets via intermediaries to either sell or buy US dollars to keep the rupee in a stable orbit.
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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
|
87.50
|
84.65 |
Euro
|
78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
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