Rupee which lost a huge value in the last year has recovered to an extent partially due to easing in global crude oil prices and just ahead of the budget due to be announced on February 1, what forces will primarily govern its movement, here is a quick take on it. In the current context, the domestic currency is trading range-bound between 71-72 level per US dollar at the interbank forex market.
By and large due to a shortfall in GST revenue collection as it is the government will go haywire when in it comes to meeting fiscal deficit target for the year and there can be a deviation by 0.2% to 3.5% from 3.3% of GDP. Nonetheless, the revenue and expenditure estimates for the year ahead in respect of their credibility, will likely maintain the current momentum of the forex markets. And a case for continued fiscal consolidation efforts may push the government to further consider rate cut in its bi-monthly monetary policy review meet in February.
Nonetheless, global factors will also play a key role in deciding the rupee's trajectory which is being weighed down due to the current global economic slowdown concerns, i.e. imminent with the policy patience stance of the US Fed, with decision to go slow in its monetary policy measures with just two rate hikes for the current year.
So, in view of the above situations, the domestic currency as per experts is likely to trade with a weaker bias in the range of 70.80 to 71.50 on the Budget day.