Indian Rupee: The roar of the Rupee will be heard next week too! The Dollar may fall to a great extent

Indian Rupee: Since February 10, the Indian rupee has been performing strongly in the currency market. Experts believe this dominance may continue next week, but its stability will depend on the dollar index. A weaker dollar index could support the rupee, increasing the chances of its continued strength.

Potential Decline in Dollar Index

On Friday, weak U.S. economic data led to a significant drop in the U.S. stock market:

• Home sales fell by 4.9% in January.
• The Michigan University Consumer Confidence Index declined in February.
• Long-term inflation expectations reached their highest level since 1995.

Due to these factors, the dollar index may decline further, benefiting the rupee.

Dollar Index Falls Below 107

Currently, the dollar index is below 107, closing at 106.64 on Friday.

• It dropped 0.75% in the past month.
• It declined 0.85% over the past three months.
• It has fallen 1.7% in 2024 so far.

Experts predict it may stay between 105.80 and 106.20 next week.

Expected Strength in Rupee

The rupee may strengthen next week due to:

• A weaker dollar index providing support.
• Currently trading at ₹86.68 per dollar, compared to nearly ₹88 on February 10.
• A recovery of over 1.5% since then.

Rupee’s Current Position

On Friday, in the interbank foreign currency market, the rupee fell by four paise, closing at ₹86.68 per dollar due to:

• Capital outflows by foreign investors.
• Weakness in the domestic market.
• A decline in crude oil prices, which helped limit losses.

Expert Opinions

Anuj Gupta (HDFC Securities): "The rupee's movement depends entirely on the dollar. Weak U.S. economic data may weaken the dollar, which could benefit the rupee."

Anuj Chaudhary (Mirae Asset Sharekhan): "The rupee may remain under pressure due to weak domestic markets and FII sell-off. However, RBI intervention and falling crude oil prices could provide support. The dollar-rupee spot rate is expected to remain between ₹86.50 and ₹87."

Conclusion

The rupee’s movement next week will depend on fluctuations in the dollar index. If weak U.S. economic data continues, the dollar may weaken, helping the rupee stay strong. However, FII sell-offs and global factors cannot be ignored. Investors should stay cautious and keep an eye on market trends.