The rupee surged after a speculated dollar inflow and a smaller trade deficit figure in November. The deficit was $20.58 billion in November, down from $31.46 billion the previous month, according to data.
This fiscal year, India's merchandise exports were $278.80 billion, down 6.51% year on year, while merchandise imports were $445.15 billion, down 8.67% year on year. Following vigorous RBI intervention, the rupee traded in a limited range during the week, and volatility was contained. According to the most recent RBI data, FX reserves increased to $615.9 billion, the highest level in 20 months.
There are no important domestic cues lined up, and the currency was influenced more by global forces. Following Fed members' hawkish statements, the dollar gained its main crossings. At the end of the week, the dollar fell against its major crosses after data showed US GDP for Q3 grew at a slower pace of 4.9% as compared to reading of 5.2% in the previous quarter.
Another Fed member pushed back expectations of future interest rate decreases. Weakness persisted as the core PCE index increased by 2.6% year on year in November, compared to 2.9% the previous month.
On the domestic front, no major data is expected this week, and global issues will continue to dominate. In the United States, pending sales and the Chicago PMI number are used to forecast the value of the dollar.
The USDINR(Spot) is expected to move sideways and quote between 82.00 and 82.50. In terms of the dollar index, we anticipate it to trade with a negative tilt and quote between 100.50 and 102.50.
Last week, the Japanese Yen was in the spotlight ahead of the Bank of Japan's policy statement. The Japanese Yen was in the spotlight after the Bank of Japan maintained ultra-loose policy settings in a largely anticipated move.
The BOJ governor stated that prices and salaries appeared to be going in the correct direction, with labor unions and large corporations indicating the possibility of sustained wage growth next year. The central bank also maintained its vow to increase stimulus "without hesitation" if necessary.
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