Provision Liabilities

The rupee went up at 82.3250 per U.S. dollar as compared to 82.7250 in the previous session and from being the record low by reaching 83.29 last week. It had opened at 82.15. India’s high trade deficit, oil prices threat and capital flow challenges conclude that the outlook for the rupee still remains weak, said analyst. The expectations of U.S. Federal Reserve to deliver comparatively smaller rate hikes post November contributed towards rupee’s recovery from record lows

Analysts said that Indian importers should take benefit of rupee recovery against the dollar in order to provision their liabilities due this year, reported a median house in on 27 October.

The rupee went up at 82.3250 per U.S. dollar as compared to 82.7250 in the previous session and from being the record low by reaching 83.29 last week. It had opened at 82.15.

It may be favourable for importers to use this dip (in USD/INR pair) and hike the proportion of their hedges according to a banking analyst.

An advice to at least record a major portion of the liabilities due till December was given by the analyst.

India’s high trade deficit, oil prices threat and capital flow challenges conclude that the outlook for the rupee still remains weak, he added in the report.

The expectations of U.S. Federal Reserve to deliver comparatively smaller rate hikes post November contributed towards rupee’s recovery from record lows.

However, the situation still remains unclear as the Fed may increase rates by 75 bps in coming week. The next two inflation readings will decide whether the U.S. central bank goes for a smaller rate hike in December or not, as per the analyst.

For the rupee to recover, there still remains enough uncertainty on the Fed side, the analyst added.