“Turkish lira plunged another 7% today and that caused a chaos in the emerging market space, with South African rand depreciating by almost 10%. Dollar-Rupee could not withstand that pressure,” Anindya Banerjee, deputy vice president for currency and interest rates with Kotak Securities, told IANS.
“Over the near term, trend of USD/INR will be dictated by Turkish lira and Euro/USD. Technically, as long as the pair holds above 69 on spot, trend remains upward. Resistance around 70 and then between 71.50/72 on spot.”
Banerjee predicted an immediate range from Rs69 to Rs71 per US dollar.
Recent US-imposed sanctions and tariffs on Turkey have had an impact on its currency.
Apart from global cues, outflow of foreign funds from the Indian equity and bond markets has had an adverse impact on the rupee.
Investment-wise, provisional data with exchanges showed that foreign institutional investors sold scrip worth Rs9,718.60mn yesterday.
“Fears of outflows from Indian equity and debt markets led to a panic sell-off. However, July CPI coming in at 4.17% will relieve some pressure on interest rates and the rupee in the near term,” said Deepak Jasani, head of retail research at HDFC Securities.
“Further rise in crude prices or fresh trouble in the emerging markets, euro area could result in risk-off sentiments setting in resulting in a fresh round of weakness for emerging market currencies including India despite intermittent RBI intervention from time to time.”
