The rupee dropped 6 paise to 66.39 against the US dollar in early trade on Monday amid lack of cues from Asian currency markets.The domestic currency had slipped 19 paise on Friday to settle at 66.33 against the greenback on fresh dollar selling by banks and exporters.
“For the time being, the rupee might be range bound till we get further cues on the US data points. So the close range of around 66.25-67.25 might be the immediate trading band on the rupee. I think it should move in either direction in big way, only if you get some surprising data on the US Fed front,” said Sudhir Agrawal, Fund Manager (Fixed Income) at UTI MF.
“We will have to wait for that data and probably, maybe for two-three more months and see if the Fed is deciding to move as per market expectation in June or not. I think that could drag our currency further,” Agarwal said.
While most Asian currency markets were shut for the day on account of Labour Day holiday, the dollar depreciated to a fresh 18-month low against the Japanese yen.
The dollar index, which tracks the movement of dollar against a basket of six major world currencies, fell 0.11 per cent to 92.97. “There are a number of factors that are unresolved for markets and given that we are in a fairly soft global growth outlook. The Fed may not be easing soon but they are still going to ease at some point. We could see a reversal in energy prices. The dollar is looking too soft. I think all these factors are actually going to reverse in the months ahead and that could put more pressure on markets,” said Mitul Kotecha, Head-FX Strategy, APAC, Barclays.