Rupee And Bond Update - Jan 25, 2023: Reliance Securities

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Reliance Securities Report

The Indian rupee could open stronger this Wednesday morning tracking easing dollar and uptick in most of its Asian peers following a decline in Treasury yields.

The rupee could also track gains in the non deliverable forward markets which has started near 81.50 per dollar this Wednesday morning.

So, the rupee could open at around 81.5500 to 81.5700 per dollar this Wednesday morning versus a close 81.7200 on Friday.

Supports for the U.S. dollar Indian rupee spot pair are at 81.50 and 81.30, while resistances are at 81.85 and 82.00 and pair could remain with the levels this Wednesday.

However, the rupee could struggle to hold onto the gains amid importer hedging and possibility of Reserve Bank of India’s presence.

For the week, investors will focus on U.S. GDP data on Thursday. Domestic markets are shut on Thursday on account of Republic Day holiday, so we could a cap up or down trade when the markets reopen on Friday.

For next week, investor focus will be on the Fed's policy meeting, as well as the union budget presentation in India on February 1.

In the overseas markets, the U.S. dollar started weaker this Wednesday morning in Asian trade on dovish Fed expectations.

Traders see only two more 25 bps rate hikes by the Fed to a peak of around 5% by June this year, with two 25 bps cuts following before year-end.

The euro gained this early Wednesday morning, but the pound sterling and the yen struggled this early Wednesday morning trade despite a subdued dollar.

Indian bond yields are expected to remain largely unchanged early on Wednesday, as traders awaited auction of the country's first-ever sovereign green bonds later in the day.

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