Rupee may trade in 48.50-49.50 range: Centrum Direct

The volatility in the currency market is here to stay. While the global factors contributed largely to the volatility in the dollar-rupee pair, domestic factors were the major contributors for the sharp depreciation of the local unit.

The hardening of interest rates, a measure taken by the Reserve Bank of India to curb inflation, is one of the major factors that led to the depreciation. Interest rates are not expected to ease before the first quarter of the next fiscal, and hence the pressure on the rupee is likely to continue in the coming months.

Increased dollar demand from importers, mainly oil and bullion, on fears of further depreciation, redemption of foreign currency convertible bonds, year-end profit booking by foreign institutional investors and its impact on the equity market are the other factors which will determine the course of the rupee.

Volatility in the dollar-rupee pair was mainly due to the news reports emanating from the euro zone. The Greek crisis has taken a centre stage and the outcome of the ongoing G20 Summit will largely decide the course of the euro.

The news of Greece likely to forgo the referendum on the euro zone bailout package has eased the situation and stabilised the euro for the time being. We expect the dollar-rupee pair to trade in the range of 48.50 to 49.50 during the week.


The author Hariprasad is VP & HEAD Treasury, Centrum Direct