Chinese markets, macro-data to guide rupee's path: Experts

The direction of global equity markets, especially of China, coupled with domestic macro-economic data and a rebound in crude oil prices, are expected to set the tone of the Indian rupee during the upcoming week, experts said on Saturday.

Analysts pointed-out that direction taken by the mainland Chinese stock markets will be a major theme for the emerging markets (EMs) currencies, especially the rupee.

The Chinese stock markets will open-up after a week's holiday, on account of the Chinese new year celebration. The China mainland stock markets are closed from February 8-12.

"For the upcoming week rupee's trajectory will be decided by the direction taken by the Chinese markets and reaction to the domestic macro-economic data," Anindya Banerjee, associate vice president for currency derivatives with Kotak Securities, told IANS.

"We can expect the Reserve Bank of India (RBI) to intervene heavily to stem any wild moves in the rupee's value."

Macro-economic data such as the monthly industrial production, retail and wholesale inflation figures are expected to impact sentiments during the upcoming week.

According to Banerjee, rupee is expected to range from 67.80-68.40 in a very near term.

Banerjee added that the global-risk off sentiment, low demand, weak investment and tightening of US monetary policy, coupled with Chinese economic woes have all impacted the rupee value during the last week.

Even the interest of foreign investors in the country's equity and bond markets will set the tone for the Indian rupee.

On a weekly basis, the rupee weakened by 59 paise to 68.23-24 (February 12) against a US dollar from its previous close of 67.64-65 to a greenback (February 5).

On Friday, the Indian rupee touched its lowest level since early September 2013 at 68.47 mark on the spot market.

The weakness in the India rupee's value indicates the massive outflow of foreign funds from the equity and debt markets.

The National Securities Depository Limited (NSDL) figures showed that the FPIs (Foreign Portfolio Investors) sold Rs.3,860.62 crore or $568.22 million in the equity and debt markets from February 8-12.

The data with stock exchanges disclosed that the FPIs divested stocks worth Rs.3,027.62 crore during the week under review.

Hemal Doshi, chief currency strategist, Geofin Comtrade, predicted the the rupee will hold 68.50 on the upside and 67.80 to the downside during next week.

"Going forward 67.80-85 and 67.50 is a very good support and resistance is around 68.50," Doshi told IANS.

Besides, currency market participants will keenly watch out for any announcements by the central government on the upcoming union budget.

Market participants are hopeful that the central government may increase expenditure, announce tax concessions and pave the way to reduce the non-performing assets (NPAs) levels of the banking sector.

Expectations are rife that the central government may be able to at least get the new bankruptcy code passed during the upcoming budget session.

According to other market observers, rupee's value is expected to strengthen further in-line with a rebound in crude oil prices.

Crude oil prices have slightly edged-up to above $27 per barrel from its recent lows of sub-$26 mark.