Daily Rupee call: INR looks weak as it remains below 76

Akhil Nallamuthu BL Research Bureau | Updated on June 22, 2020

The rupee (INR), after ending last week by half a per cent lower, has today opened on a flat note against the dollar (USD). It opened at 76.17 versus Friday’s close of 76.19. As it closed last week below the support of 76, the local currency might witness a downward pressure.

If INR weakens from current level, it is likely to find support at 76.3. A break below this level can drag the rupee to 76.5. On the other hand, if the local currency appreciates, 76 can be a significant hurdle. Breakout of this level can take the exchange rate to 75.8 and 75.6, which are the resistance levels for INR.

Last week, the Foreign Portfolio Investors’ (FPI) net buying came down by about ₹2,600 crore (equity and debt combined) as per the latest data by the National Securities Depository Limited (NSDL). This has brought down the net inflow for the current month to ₹18,020 crore. However, the net flow of FPIs this month has been positive so far after being negative in the preceding three months. Thus, if the buying trend comes back, it can help rupee firm up against the greenback. But if the selling continues, INR might witness more decline.

Foreign reserves:

The weekly statistical supplement released by the Reserve Bank of India (RBI) last Friday showed that the foreign reserves is at record high as it increased in the period between June 5 and 12. As per the latest report, the total reserves increased by $5.9 billion i.e. it increased to $507.6 billion from $501.7 billion; the current position is an all-time high. Foreign Currency Assets (FCA), the largest component of the reserves, increased by $5.1 billion to $468.7 billion from $463.6 billion. The value of gold holding increased as well; it has gone up by $0.8 billion to $33.1 billion compared to the preceding week. Increasing reserves is a positive factor for the Indian currency.

Dollar index:

The dollar index gained last week and as a result it has closed in the green for two straight weeks. This indicates a good buying momentum. But today, the index has softened after facing the resistance at 97.75 and is now trading near 97.5. If it corrects further – which indicates dollar selling, can have a positive influence on the rupee.

Trade strategy:

The rupee, after opening flat, remains below the important support of 76. Until it remains so. It can be bearish and so, traders can sell rupee with a tight stop-loss for intraday.

Supports: 76.3 and 76.5

Resistances: 76 and 75.8

Published on June 22, 2020

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