Omicron Effect: Rupee may weaken due to Omicron variant of Corona and inflation

The increase in bond yields and rising cases of Kovid-19 is likely to weaken the Indian rupee in the coming week.

Rupee may weaken

Bond yields rise and covid-19 (Coronavirus) Indian Rupee in the coming week due to increasing cases of (Indian Rupee) likely to weaken. Moreover, the persistently high energy costs may tame the bulls of the rupee. However, with the resumption of FII inflows, the US dollar (US Dollar) Any major depreciation in the value of Rupee against Rs. Sajal Gupta, Head, Forex & Rates, Edelweiss Securities, said, “The widening trade deficit as well as concerns over US Fed’s taper measures and rising yields could put pressure on the rupee in the coming year. “Crude oil may also play poorly if it moves towards the level of 85. Omicron’s anxiety can also dampen emotion.”

The rupee had closed in the range of Rs 74.31 per dollar last week.

Last week, the rupee had closed in the range of Rs 74.31 per dollar. In that period, the rupee depreciated by Rs 74.30 on Reliance’s issuance of US dollar bonds, despite a jump in the dollar index and higher crude oil prices.

“Next week, rising bond yields, apprehensions of higher COVID-19 infections, higher energy costs and RBI intervention may spoil the side of the rupee,” said Devarsh Vakil, deputy head of retail research, HDFC Securities.

“We expect the rupee to trade with a weak bias in the range of 74.20 to 74.90 next week,” he said.

Macro-economic data points to be released on January 12

According to Gaurang Somaiya, Forex and Bullion Analyst, Motilal Oswal Financial Services, “Next week, on the domestic front, market participants will keep an eye on inflation and industrial production numbers. A sharp rise in inflation may increase the chances of a rate hike. RBI but at the same time a disappointing industrial production rate may dampen expectations of growth.”

“From the US, the Fed chairman’s testimony will focus on inflation and retail sales numbers. A sharp statement from the Fed chairman and better-than-expected retail sales numbers could increase profits for the greenback.”

The Central Statistics Office (CSO) will release the macro-economic data points of IIP and CPI on January 12.

With IANS inputs

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