Currency Forecast

Daily Forecast ( Date: 27-02-2024)

The rupee is expected to open at around 82.87 against the dollar. Sentiment is turning bullish as carry trades in emerging market currencies accelerate. However, a global month-end dollar bid in the second half of the day may limit the rupee’s gains. The technical bias for the USD/INR pair remains negative, with an expected day range of 82.77 to 82.95.

Weekly Forecast (26-02-2024 to 01-03-2024)

The Indian Rupee is poised to start the week slightly higher against the US Dollar, maintaining an upward trajectory after posting its second weekly on the week ended on February 23 . Meanwhile India is anticipated to witness passive inflows totaling $1.2 billion into its equity markets following MSCI’s quarterly review, scheduled to come into effect on February 29.

Market participants are eyeing the release of US January Personal Consumption Expenditures (PCE) data on Thursday. The data is expected to reinforce the prevailing market consensus that the Federal Reserve is unlikely to implement rate cuts in either March or May. This week, several Federal Reserve officials are scheduled to deliver speeches. Their remarks could offer valuable insights into the central bank’s policy outlook, influencing market sentiment and direction.

Technically, the USD/INR pair continues to face downward pressure, with 82.80 serving as a critical support level on a weekly basis. A breach of this level could trigger heightened hedging activities among exporters. On the upside, resistances are now identified at 83.00.

Monthly Forecast (February 2024)

The Indian rupee closed positively at 83.04 against the U.S. dollar in January, marking its strongest monthly gain (0.2%) since June 2023. Despite a resilient U.S. dollar, the rupee held ground, supported by potential dollar sales from exporters. The fiscal deficit for FY24 was revised to 5.8% of GDP, slightly below the budgeted 5.9%, and is expected to be 5.1% for FY25. The rupee’s rise was influenced by lower-than-expected gross borrowing estimates for FY25, at 14.13 trillion INR compared to the market’s 15.6 trillion INR estimate.
 
Globally, the U.S. dollar remained near a seven-week high against the euro as Federal Reserve Chair Jerome Powell dismissed immediate rate cut prospects. Powell’s comments reduced expectations of a March rate cut, with futures now indicating a 38% probability, down from 59% before the Fed decision and significantly lower than the 89% a month ago.
 
Looking ahead, February’s U.S. economic data, including non-farm payroll and CPI, will drive the dollar’s performance against a basket of currencies. Additionally RBI MPC meet later this month where rates are expected to remain unchanged will keep the USDINR volatility slightly higher. However historically the dollar index February’s performance since 2000 shows it has risen in 15 of the past 24 years, including the last seven years in a row.
 
The expected monthly range for USD/INR is 82.20 to 83.30, with a modest downside bias.

Disclaimer:

Currency forecasts are based on technical and fundamental analysis and taken from some trusted sources. IBR Live does not make its on forecasts. Forecasts may change frequently based on present facts and future events and may differ from actual prices. One should not fully rely on the above forecasts while making any financial decision. IBR live takes no responsibility on making any financial decisions based on the above forecasts.