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Rupee to head towards 65.30 vs dollar in coming days – Angel Broking

The Indian rupee is likely to give up some of the gains it has made in recent weeks going forward, Angel Broking said, adding that the currency is likely to move towards the 65.30 level against the US dollar.

The rupee has risen around 5% in the last six months due to various factors, including the accelerating economic reforms that led to an increase in foreign fund flows into the country’s stock markets.

However, after peaking in late April, the Indian currency has given up some of the gains in recent days, partly due to hawkish commentary coming from the US Federal Reserve indicating that it will start absorbing liquidity from the global financial markets soon.

A reversal of the ‘easy money’ policy of the US central bank would lead to a return of capital from emerging markets such as India back to the US, strengthening the dollar.

“Hawkish tone in the statements of BOE, FOMC and ECB policymakers will prompt the traders to invest in dollar denominated assets,” said Prathamesh Mallya, chief analyst for non-agricultural commodities and currencies at Angel Commodities Broking. “Indian Rupee has enjoyed its share of positive trend for quite some time now and is likely to witness some reversal in the coming days.”

Other factors, such as the newly introduced the Goods and Services Tax will also add to the weakness, he added.

“The installation of GST bill shall create some disruption in the near term with consumers feeling the pinch due to higher taxation on services. However, on the macro level there is a huge scope of improvement in the growth rate as high tax rate shall give the government high revenues to invest in the economy,” he added.

The dollar had touched almost Rs 69 in November last year, but has steadily lost ground in 2017, falling to Rs 64 in May. It has since risen to about Rs 64.76 at present.

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