Due to the fast developing situation in Ukraine, Indian rupee opened weaker against the US dollar, dealing at 61.90 on spot. However, a large order US Dollar inflow from a corporate helped the Rupee to attempt a recovery towards 61.80, but it could only manage 61.83/84, where demand for US Dollar from oil marketing companies got better-off. News of Russian central bank hiking interest rates to arrest a sliding Rouble, crossed wires, Rupee came under further pressure and inched closer towards 62.00 handle. Domestic equities sold-off in line with the heavy sell-off witnessed across Europe. Rupee touched a low of 62.08/09, before closing around 62.04/05 levels on spot.
Over the near-term, traders will continue to watch the geopolitics in Ukraine and also the financial market developments in China. Inflows would continue to trickle in and hence Rupee would continue draw strong support between 62.40/60 region, but at the same time, hedging demand from importers as well as OMCs, might keep the US Dollar well supported around 61.40/70 region. Therefore, look to play the above range. For the US Dollar to break above 62.60, a substantial deterioration in global risk appetite has to occur, in which case, a run towards 63.30/50 can occur.
By Anindya Banerjee, analyst, Kotak Securities