Currency market update: Rupee to soar as crude oil prices decline

The rupee is projected to rise as crude oil prices fall and the dollar weakens. Continue reading to learn more.

On Wednesday, the dollar index fell over 1.16 per cent as the mood in financial markets improved. Following a brief bounce on Thursday, the dollar index fell further, shedding almost 0.16 per cent in early trade. Having said that, it is still trading higher than the previous day's close. The dollar index has received some cushioning as the JOLTs job opening data from the United States came in higher than expected.

The March futures of the USD/INR pair increased by over 0.41 per cent as a result of low crude oil prices and a weak dollar index. On the other hand, ongoing withdrawals from domestic markets by Foreign Institutional Investors (FII) are adding to the pressure on the Indian rupee.

With the dollar down, the Euro will likely have a favourable tilt. Furthermore, talk is rife about the European Union's upcoming release of a major defence and energy stimulus package. The Euro may continue to rise as a result of this. On the other hand, it is believed that the European Central Bank (ECB) would delay tightening monetary policy, putting pressure on the Euro. Having said that, the EUR/INR pair's march futures are expected to rise further to 84.8 levels.

The Indian rupee is projected to strengthen as crude oil prices have fallen and the dollar has devalued. Having said that, global markets may continue to support the Indian rupee due to an increase in their risk appetite. On the other side, it is expected that the US consumer price index would be stronger than expected, providing some support to the dollar. 

The USD/INR pair's march futures are expected to move towards 75.82, with resistance ranging from 76.33 to 77.16 on the upside. Furthermore, it is receiving strong support from its 10-Day Exponential Moving Average (EMA).