The Hindu Business Line : Rupee meanders sideways

The rupee remained glued to its short-term trading range against the dollar. Interestingly, some of the other emerging market currencies such as Thai Baht, Brazilian Real and Korean Won are mimicking the rupee movement over the last two weeks. Lacklustre movement in the equity markets in these countries could be one of the reasons for such directionless currency movement.

Dollar strengthened despite the President, Mr Barack Obama’s $800-billion plus stimulus spending plans. Dollar index traded on Inter Continental Exchange recovered from the support indicated in our last column at 84. It could move between 84 and 87 for a few more sessions. Outlook for the greenback will stay positive as long as this index trades above 84.

Five-day view

Rupee moved between 48.3 and 49.2 against the dollar over the past week. It has not yet broken out from the descending triangle pattern discussed in the last column. But the formation of lower peaks since December 19, 2008 affirms that the near-term bias continues to be negative.

That said the support at 49.2 needs to be breached to pull the currency down to 49.8 or 50.9. Else the current range bound move will continue. Key short-term resistances are at 48.5 and 48.

One-month view

Our medium-term view for rupee remains neutral and the range for this term is between 46.5 and 50.5. Close above the upper boundary at 46.5 is required to turn the medium-term view positive.

Supports – 49.2, 49.8, 50.9

Resistances – 48.5, 48, 47.4

Lokeshwarri S. K.

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