• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Brand Quest
• The New Manager
• BL Club
• Smartbuy

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus
• In Depth
• Events 2007

Group Sites

• The Hindu
• The Hindu ePaper
• Business Line
• Business Line ePaper
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Rupee scaled the 50-mark towards the end of last week aided by heightened volatility in equity markets. But nerves were assuaged once Citigroup’s bail-out package was announced, giving a reprieve to both Indian equities as well the rupee.

Dollar moved southward on Monday due to reduction in risk-aversion among investors. US dollar index on ICE declined sharply to 85. The key support for this index is at 84. A close below this level is needed to signal that the intermediate term up-move has terminated. Rupee weakness in non-deliverable forwards (NDF) market continued, signalling that arbitrageurs expect rupee to weaken further. One-month forward in NDF market was trading at 50.5 while three-month forward was trading at 52.

Rupee recorded a trough at 50.6 on November 20 and has appreciated slightly since then. The currency is halting close to the lower boundary of our medium-term range between 46.4 and 50.5. But the shallow sideways move witnessed over the last four sessions indicates that the support at 50.5 can be penetrated and a move lower towards 53 is possible soon.

However, if the currency appreciates above 49, it would imply that the rally can extend towards the resistance at 47. We remain with the view that appreciation above 46.4 is required to make the medium term view positive.

The short-term down trend from 46.7 is still in force. The sideways move between 49.7 and 50.5 appears to be a halt before the decline continues to take the currency towards 50.5 or 52 in the near term.

Resistances for the currency would be at 49 and 48.2. Inability to move above 49 would imply that a decline below 50.5 is imminent in the near term.

Supports – 50.5, 51.9, 52.3

Resistances – 49.1, 48.2, 46.7

Lokeshwarri S. K.

Copyright © 2008, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line