Rupee-dollar may move within 44.70-45.20 band

Vikash Bairoliya, Currency analyst, Nirmal Bank Securities

The rupee is likely to trade in the 44.70-45.20 range with an appreciation bias. The local currency remained depreciation-biased, testing as low as 45.42 against the US dollar last week. Broader themes like risk sell-off and strong dollar bids, amid the European debt concerns and weak growth numbers from China, Europe and the US, drove most of the Asian currencies lower and the rupee followed suit.

On the domestic front, month-end dollar demand from oil importers added to the pressure on the rupee. However, lower-than-expected US GDP numbers turned out to be a game-changer towards the weekend as it underscored the persisting weakness in the US economy and induced the prospects of QE III by the Fed. This development gave investors a reason to dump the US dollar, which in turn offered some respite to Asian and other currencies.

Going forward, we believe that global market sentiments, rather than domestic factors, would have a bigger impact on the direction of the rupee.