View: Rupee to trade in 69.70 to 70.50 range

By Gaurang Somaiya

The rupee has remained under pressure against the US dollar ahead of the important industrial production number that was released at the end of last week.

Data showed India’s industrial production contracted 0.1 per cent in March due to slowdown in the manufacturing sector. Volatility in major crosses was primarily on the back of the ongoing talks between US and China.


This week, on the domestic front, market participants will be keeping an eye on inflation and expectation is that it could rise in April following rise in food prices. On the other hand, further appreciation in the greenback could weigh on the rupee. For the week, we expect the USD-INR to quote in the range of 69.70 to 70.50 (Spot).

Euro rallied for the second successive week and volatility remained high as talks between representatives of the US and China are ongoing in Washington.

Last week, US President ordered to hike import tariff to 25 per cent from earlier 10 per cent on Chinese products worth $200 billion. The President tweeted that “Over the course of the past two days, the United States and China have held candid and constructive conversations on the status of the trade relationship between both countries.”

During the week, dollar had a see saw move and this week market participants will be keeping an eye on any further updates on the US-China trade talks. From the euro zone, preliminary GDP and final CPI number will be important to watch and could provide trigger to the EUR-USD pair that has been trading in a narrow range for the past few sessions.

Japanese Yen has been strengthening against the US dollar primarily on back of uncertainty between escalating trade talks between US and China.

On Friday, the US president decided to increase import tariff on Chinese goods worth $200billion but talks between representatives of both the economies are still on. There are expectations that leaders of both the economies could meet at the G20 summit in Japan scheduled in late June.

This week, from Japan, preliminary GDP number will be the only important economic data to watch, but the currency is more likely to react to any further update on the ongoing talks between US and Chinese officials.

(Gaurang Somaiya is Analyst - Forex and Bullion at Motilal Oswal Financial Services)