Rupee may trade in 69.70-70.80 range this week

By Gaurang Somaiya

The rupee rose against the dollar for the third successive week, primarily on the back of funds inflows into India. This week's flows were driven by government stake sale in Axis bank, and Vodafone related flows led the rally. Traders were positioning themselves ahead of the bankruptcy verdict that could bring in funds worth over $5 billion in the near future.

The rupee was unaffected by strength in the dollar and a jump in global crude oil prices. This week, on the domestic front, market participants will be tracking inflation and industrial production to firm up their view for the currency. The USD-INR pair is expected to quote in the range of 69.70 and 70.80.


The euro plunged against the dollar after the ECB in its policy statement held rates unchanged and decided to launch a new series of quarterly targeted longer-term refinancing operations (TLTRO-III), starting in September 2019 and ending in March 2021, each with a maturity of two years.

The central bank also lowered its growth forecast for the year from 1.7 per cent to 1.1 per cent, which also weighed on the euro. This week, from the Euro zone, final CPI number will be important to watch and better-than-expected data could restrict the weakness for the currency. The EUR-USD pair is expected to quote in the range of 1.1140 and 1.1350.

The pound was weighed down ahead of the important Brexit vote that is scheduled this week and that could create a lot of volatility. Economic numbers from the UK have been in line with expectations, but this week market participants will be keeping an eye on GDP and manufacturing production.

Importantly, the Brexit vote will be the most important event as it will trigger a move for the currency in the near future. Expectations are that the UK Prime Minister may face heavy defeat and that could keep the currency under pressure. For the week, the pound is expected to move in a broad range of 1.2870 and 1.3200.

(Gaurang Somaiya is Currency Analyst at MOFSL)