The Hindu Business Line : Rupee under pressure

Rupee was unfazed by the Satyam scam that exploded last Wednesday, dragging the Sensex 750 points lower. It did not budge beyond the narrow range within which it has been moving since Christmas. Easing crude prices and muted FII activity could have contributed to the rupee stability.

Volatility is however back in other currencies. Yen strengthened to 89 against the dollar as a slew of Japanese companies reported weak earnings. Euro recorded a 1-month low against the dollar on deteriorating economic outlook in the euro zone. Dollar index held steady around 83.

Five-day view

Rupee has been moving in a band between 48 and 49 over the last twelve sessions. But the short-term trend is down since the recent peak at 46.8. We believe that the currency is biding time before making another attempt at getting to the 50 mark. Short term supports are at 49.5 and 50.5.

Near term view will turn positive only on a rally above 47.5.

One-month view

The medium term trend in rupee is sideways. It is moving in a broad range between 46.4 and 50.5 over this time frame. Since the long-term trend is down from the January 2008 peak at 39, this sideways move will be construed as a halt before the resumption of the long-term down trend that takes the rupee beyond 50 again.

A rally beyond 46 will however negate this view and will imply that the move from January 2008 has ended at December trough at 50.6. A rally to 45 or 43 will then become possible.

Supports – 49.3, 49.6, 50.5

Resistances – 48.2, 47.5, 46.4

Lokeshwarri S K

More Stories on : Forex | Technical Analysis

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page