Exclusive: Forex Expert on Key INR Levels, RBI’s Rate-Hike, Global Growth & More

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Exclusive: Forex Expert on Key INR Levels, RBI’s Rate-Hike, Global Growth & More

By Malvika Gurung

Investing.com -- After days of incessant rout, the Indian rupee eased from its lifetime low hit against the US dollar on Tuesday and rose to 81.39/$1 in the morning session after slipping to a record low of 81.67 in the previous session.

Read Also: INR Rout Extends, Falls to New Low, Key Levels in Focus; USD Hits 20-Yr Peak

Despite the domestic currency swaying away from its record low, it continues to remain above the 81-mark. INR has tanked significantly since the onset of the Russia-Ukraine war and has been hammered with the US Fed’s aggressive monetary tightening, just like other Asian currencies.

In a note provided to Investing.com, Kunal Sodhani, Vice President, Global Trading Center, Shinhan Bank says, “Surging real yields have been behind the latest bond market sell-off, with the 10Y UST real yields up 150 bps since early August, which in turn is pressuring risk assets. Global growth is likely to come down led by monetary tightening by the U.S. considering high inflation, energy disruption in Europe, and real estate slowdown in China.

As per charts, DXY can test 114.50 levels followed by 115.70. Any reversal can be seen if DXY falls below 112.10 levels.”

Citing views on the domestic front, Sodhani states that surplus liquidity has been falling as FX reserves have dropped from highs of $643bln to $545 bln to date. Forward cover has reduced by $44bln since March 2022.

“RBI is expected to raise interest rates by 50bps on September, 2022. MPC may take the repo rate to 6.25% by December, 2022.

Current account deficit is expected to be around $120 bln in FY23. Brent crude prices have come off and can test $77/bbl. For USD/INR , 80.40 now acts as support while 82.20 may act as a strong resistance,” Sodhani adds.

Experts peg an upbeat outlook on the US Dollar in the year as monetary tightening by major central banks is expected to bolster the greenback’s dominance.

Read Also: RBI MPC Outlook: When, Announcement Timing, Rate-Hike Expectations & Headwinds

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