INR vs USD: Rupee-dollar deviation to remain stable in July, US Fed rate cut remains a major trigger

INR vs USD: Indian rupee has climbed up to Rs 68.5 per US dollar in the Forex market as investors expect a delay in US Fed rate cut post strong US job data. The Indian rupee gained around 20 paise as investors in the Forex market got a cue from robust US job data indicating the US Federal Reserve may delay the interest rate cut it had announced in June. As per the Forex market experts, Rupee-Dollar deviation is expected to remain stable and until July may trade in the range of Rs 68.4 to Rs 69.2 per American dollar.

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Commenting on the reason for Indian National Rupee (INR) rising against the US dollar (USD) Anindya Banerjee, Deputy Vice President — Currency and Derivative at Kotak Securities said, "Major reason for Indian rupee gaining against the US dollar is due to the speculations that the US Federal Reserve may delay its decision to cut interest rates, which it had announced to start from July onwards. But, I think they would delay it for next Job data as the current one is more than 1 lakh. If that also comes positive, then the only anything concrete about the Fed rate cut can be said. Till then, we can only say that the robust US job date has put Fed decision in regard to interest rate cut on hold." Banerjee went on to add that till July, there is no such major trigger in regard to rupee-dollar deviation and hence till July end, the rupee would continue to move from Rs 68.4 per dollar levels to Rs 69.2 per dollar.

Anuj Gupta, Deputy Vice President — Currency and Commodities at Angel Broking said, "Federal Reserve's interest rate cut would remain a major trigger in regard to the INR-USD deviation. Apart from that crude oil prices are expected to affect the rupee price at the Forex market as any rise in crude oil prices would directly affect Indian fiscal deficit targets." He said that rupee would remain calm till the end of July but in August it is expected to become volatile as Monsoon will have its impact for sure.

On FIIs fuelling rupee prices in the Forex market, Gupta said, "FIIs are expected to pump their money into the Indian bond market as the Indian bond yield is one of the highest yielding bond market in the world. It will also help rupee stand firm against the US dollar."