Rupee Gains Ground Post US GDP Data; BofA Sees It To Hit 82/$

Rupee in trade on July 29, 2022 has recovered in trade today. Last at the time of writing this copy, the domestic unit as against the previous day's closing of 79.76 traded strong at 79.24 (gaining 0.45%).

The rupee has gained as the recent US GDP data figure has led investors to lessen expectations on Fed hiking rates in the next Fed meet. This is as the US GDP contracted for the second straight quarter and traditionally a recession is said to hit an economy if its gross domestic output reduces for the second straight time.

"The rupee has opened stronger today after the release of the second quarter (US) GDP which contracted at a 0.9 percent annualised rate resulting in 2 back to back quarters of contraction which can be loosely defined as a recession," said a currency trader from Mecklai Financial Services.

Meanwhile, foreign brokerage BofA sees the domestic unit to hit levels of 82 per dollar by December, though the decline shall be gradual.

The firm is of the view that while rupee has breached the mark of 80 lately, the RBI has been selling forex to streamline the system. Furthermore it has announced several steps to ensure and liberalise foreign inflows. In this direction, some of the banks have also raised NRE term deposit rates.

Meanwhile, it says that the comfortable forex reserves, forward book as well as the slowing global commodity prices shall eventually be showing up in monthly trade deficit numbers. This is as it sees the local currency to weaken only gradually.