The rupees are likely to depreciate against the dollar in the near term

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Going forward, the rupees are expected to fall on the strength of the story, options in global markets, and rising crude oil prices.

The rupees had gained 23 percent to 74.35 against the US dollar in early trade on Wednesday (January 5). In the international market, the domestic unit opened against the U.S greenback at 74.54, hitting a daily high of 74.30, reaching 74.35 at 74.35, a 23 percent increase over the previous close.

 In the last session, the local currency fell 30 pairs to close at 74.58 against the US dollar. Meanwhile, the Dollar index replaced earnings from falling U.S. Treasury yields. Going forward, the rupees are expected to fall on the strength of the story, disruptions in global markets, and rising crude oil prices.

USDINR Can be traded on: Gaurang Somaiya, Forex & Bullion Research, Motilal Oswal Financial Services

 The lack of information in the country also hampered the rupee’s strength. It is under the weight of news at its major crossroads after the production PMI released from the U.S came in below estimates.

At the U.S. meeting, the budget eased losses after minutes of Federal Reserve meetings revealed that the U.S central bank may need immediate action on raising interest rates by threatening the weather forecast. Fed officials say the extremely tight U.S. market is likely to signal a rise in prices sooner than expected as well as a reduction in the size of bank assets to threaten inflation. 

Global Energy Affects Rupee: Kshitij Purohit, Lead Commodity & Currency at Capital via Global Research

 The strength of the local currency also contributed to the increase in revenue. Currently, foreign investors are investing $ 482 million in Indian sales this year. The value of the rupees is projected to be affected by global energy. The rupee, on the other hand, is likely to find support as local currencies move along with their US counterparts.

Yields on 10-year government bonds rose above 6.5% to 6.5425% today, the highest level since February 2020, following signs of a sharp contraction by several central banks amid rising inflation. As more cases were reported in the country this week than the previous week, the impact of the rapidly spreading omicron disease on the financial recovery has dragged the bond market backward.

The US dollar is rising as investors expect the Federal Reserve to begin raising interest rates in March, despite a strong recovery in the US economy and inflation. Most Asian currencies were lower as the dollar recovered to 96 levels just minutes before today’s federal meeting.

Technically, if the dollar index trades above the $ 96.00 level, it will witness bullish momentum to the $ 96.44- $ 96.70 level. The support zone is at $ 95.88- $ 95

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