Rupee fell to 8 months low today on dollar buying by oil importers and state run banks.
The currency fell to 62.22 in morning trading hours and regained a little then-after. Rupee breached the long remained resistance of 62.0 as pressure increased from buyers and strong dollar against major currencies.
The depreciation could have come as India is supposed to make payment of $400 million to Iran for oil deal. Market players are also expecting RBI buying as exports had become less competitive due to range bound rupee and depreciation in other major currencies. The step might have taken by the Central Bank to promote exports but it may not let the currency depreciate heavily.
Dollar index which measures the performance of dollar against six major currencies gained 0.12% to 87.79. U.S. CPI, Core CPI and jobless claims will be released today. All are expected to remain near about last reading. In FOMC meeting minutes, which is released today, it was very clear that officials are expecting no more assets purchase required to boost the economy but the longer term inflationary pressure may remain in focus. The committee is expecting sustainable growth and thereby gradual increase in jobs in coming months.
We are expecting rupee to remain in the range of 61.60 to 62.30 in near time. FII flow in debt and equity market may provide cushion to the depreciating currency. Traders should remain cautious on market sentiments of rate cut before RBI meet on 2nd Dec that may depreciate rupee further.