Sell USDINR; target of : 81.60 : ICICI Direct

Indian Rupee

The US dollar index extended losses on Wednesday and fell to a nine month low after Federal Reserve raised interest rate by 25 bps in line with market expectations. The Fed chairman Jerome Powell also spoke of making progress in bringing down inflation pressures. Further, the dollar was pressurised by a sharp drop in US 10 year’s treasury yields and as private businesses in the US created 106,000 jobs in January 2023, well below market forecasts of 178,000. It is the lowest reading since January 2021 • Rupee future maturing on February 24 remained volatile because of the Union Budget but closed flat despite a weaker dollar index and drop in domestic equity markets • The rupee is likely to appreciate today amid weakness in the dollar and rise in risk appetite in global markets. Further, the rupee may be supported as Government of India in the Budget said it will target a fiscal deficit of 5.9% of GDP for 2023/24 compared to 6.4% for the current fiscal year. US$INR is likely to trade towards the level of 81.60.

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