Forex

Rupee advances above 74

Akhil Nallamuthu | Updated on November 26, 2020

BL Research Bureau

The rupee (INR) settled higher by nearly 10 paise yesterday against the dollar (USD). As a result, it closed at 73.91 i.e. above the important level of 74 – a positive indication for the domestic currency.

Today, INR has opened with a gap-up at 73.82 and it is currently hovering around 73.85. A rally from here can take the rupee to 73.7 above which it can advance to 73.5. But if bulls lose traction and rupee slips below the support of 74, it can find support band between 74.2 and 74.3.

Despite the market losing significantly yesterday, the Foreign Portfolio Investors (FPI) flows look balanced as the inflow (₹6,931 crore) and outflow (₹6,907 crore) remained almost same. Thus, the net investment was a meagre ₹24 crore (equity and debt combined) having a muted effect on the exchange rate of USDINR.

Dollar index

The dollar index declined yesterday as well, closing with a loss for second straight session. After closing at 92 yesterday, it has inched down today and is now trading around 91.9. The price action exhibits a bearish inclination and the index is likely to drop to 91.75. Subsequently, it could fall to 91.5.

Trade strategy

The rupee looks positive as it has closed above a barrier at 74. Also, the dollar index hints at further weakening in the dollar. Given these factors, traders can buy rupee on declines with stop-loss at 74.

Supports: 74 and 74.2

Resistances: 73.7 and 73.5

Published on November 26, 2020

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