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

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

Risk-aversion returned to financial markets on growing concerns regarding the fate of the US automakers and poor performance of banks in March. Dollar appreciated sharply against major currencies last Friday even as the 3-week-old rally in US equities came to an end. Dollar index traded on the Inter Continental Exchange reversed from the key support at 83 and moved higher to 86.

Strength in dollar made rupee move below 51 on Monday. The Indian currency failed to penetrate the resistance at 50 despite the strong surge in equity markets last week and foreign institutional investors bringing in over $600 million to invest in stocks since March 20. Demand for dollars from importers could also have helped in curtailing the up-move in rupee.

The medium term trend for the rupee is down since the peak at 46.8 recorded in December 2008. The negative medium term view will be mitigated on a strong move above 49.7. Next medium term target would then be 48.8.

However, sideways move between 50 and 52 would imply that the currency is consolidating sideways before unfolding the next leg lower to 53. As explained earlier, one leg of the down-move from January 2008 peak could be drawing to a close and this move could halt in the band between 52 and 53. Decline below 53 will, however, make the outlook overtly negative.

Rupee recorded a low at 51.3 on Monday before reversing higher. The short-term view on the currency is neutral. The currency unit could be volatile in the range between 50 and 52 for a few sessions before a clear direction emerges. Immediate resistance for the rupee is at 50.5. If the rally halts below this level, there can be another leg of decline that takes rupee lower towards 51.3 or 51.9. Conversely, a rally above 50.5 will take the currency towards the resistance at 50 or 49.7.

Supports – 51.3, 51.9, 52.1

Resistances – 50.5, 50.02, 49.7

Lokeshwarri S.K.

Copyright © 2009, 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