By Raj Deepak Singh
Rupee depreciated in the last week reaching new record low amid strong dollar and risk aversion in the global markets. Further, rupee skid on persistent FII outflows and on fears that economies may tumble into recession. Furthermore, India’s CPI data showed inflation remained above 7% for a third consecutive month and stayed higher than RBI’s comfort zone. Dollar index rallied amid expectations that US Federal Reserve will hike rates faster than its peers to tackle soaring inflation. Further, dollar advances on risk aversion in the global markets and hawkish statement from a Fed official.
Further, world second largest economy China recorded its weakest growth rate in more than 2 years. GDP expanded at 0.4% annual rate in April to June period. Furthermore, disappointing economic data from country will hurt domestic currency. Market participants will keep an eye on Manufacturing and Services PMI data from major countries across the globe to gauge economic health.
USDINR (July) as long as it sustains above 79.10 it may slip further till 80.50 in this week. For Monday, Rupee may continue with its depreciation mode amid strong dollar and pessimistic global market sentiments. Additionally, rupee may slip on persistent FII outflows and as red hot inflation reading from the US stoked bets that the US Fed may have to raise interest rates much more than expected. As long as USDINR sustains above 79.70 it may slip further till 80.20 level.
(Raj Deepak Singh is an Analyst – F&O, Currency, and Commodities at ICICIdirect. The views expressed are the author’s own. Please consult your financial advisor before investing)
