Lower oil prices to counter Omicron fears; Still, the rupee will remain subdued, Energy News, ET EnergyWorld

Mumbai: Concerns over new variant of Covid-19 Omicron, along with continued outflows of foreign funds, will keep the Indian rupee lower over the coming week.

In addition, the rise trade deficit as well as fears of gradual downsizing in the United States are likely to hamper any appreciation. However, the decline will be limited by lower oil prices.

“The increase in the trade deficit and the decrease has had an impact on the rupee. The REIT’s continued withdrawal from stocks was countered by IPOs so far, and could go on for a bit longer, ”said Sajal Gupta, Head of Forex and Rates at Edelweiss Securities.

“The Omicron variant is also a less uncovered problem. It would take time to decipher. However, India should benefit from its large vaccinated population,” he added.

Last week, the rupee closed at 75.10 against the greenback, weakening significantly. “Risk sentiment is slowing down as concerns over Omicron have created uncertainty about the sustainability of growth,” said Devarsh Vakil, deputy director of retail research, HDFC Securities.

“Rupee traders focus on the movement of the dollar index, crude oil, fund inflows and news on the new virus spot, which will be crucial for directional trading, ”Vakil added.

He cited that the forex market is expected to remain turbulent over the coming week. “The rupee is expected to stay in the 74.70 to 75.70 range,” he said.

According to Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services: “Next week market participants will keep an eye on the RBI policy statement and expect the central bank to begin the normalization process. politics amid signs of higher inflation. by raising the repo rate from its current record level of 3.35 percent.

“Any hawkish comment from the RBI governor is likely to restrain the rupee’s significant fall.” Emkay Global Financial Services’ Currency Desk said: “Next week we will have an RBI policy and a likely tightening by increasing the reverse repo rate could limit any increase in the spot USDINR.

“We therefore expect the USDINR spot to continue to hover between 74.70 and 75.50. As long as it is trading above 74.70 it will continue to trend up.”


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Felix J. Dixon