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The rupee (INR) opened today on a flat note, at 76.45 versus its previous close of 76.4 against the dollar (USD). Thus, the exchange rate remains between 76.4 and 76.65.
Last Friday, the rupee opened with a gain against the greenback. It then rallied and ended the day with a gain as the Reserve Bank of India (RBI) came up with measures to combat the crisis instilled by the Covid-19 pandemic. The central bank reduced the reverse repo rate by 25 bps to 3.75 per cent, to improve the liquidity conditions.
The domestic currency closed at 76.4 on Friday after marking an intraday high of 76.35, gaining 0.6 per cent. However, on weekly basis it closed marginally lower compared to preceding week’s closing price of 76.29; also, the Indian currency has lost about 7 per cent year-to-date.
The outflow of Foreign Portfolio Investments (FPI) continues to be a drag on the local currency. For the current month, the net outflow of FPI is at ₹12,132 crore (equity and debt combined) as per the latest data by the National Securities Depository Limited (NSDL).
Foreign reserves:
The weekly statistical supplement released by the Reserve Bank of India (RBI) last Friday showed that the foreign reserves have gone up between April 3 and 10. As per the report, the reserves increased by $1.8 billion i.e. the total reserves increased to $476.4 billion from $474.6 billion. Foreign Currency Assets (FCA), the largest component of the reserves is up by around $1.2 billion to $440.3 billion from $439.1 billion. Also, the value of gold holdings has gone up to $31.1 billion compared to previous week’s $30.5 billion.
Dollar index:
The dollar index ended the previous week on a flat note; it continues to hover around the key level of 100. At this level, the 21-day moving average coincides, making it a considerable hurdle. The index should breakout of 100 to establish next round of rally. On the other hand, a prolonged consolidation at current level can increase the likelihood of a decline.
Trade strategy:
The rupee is trading between 76.4 and 76.65 and so it is recommended to stay on the sidelines until either of these levels are breached. Traders can either buy the rupee with tight stop-loss if it rallies above 76.4 or traders can sell the rupee with tight stop-loss if it weakens below 76.65.
Supports: 76.65 and 76.9
Resistances: 76.4 and 76
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