Daily Rupee call: Initiate short below 75

Akhil Nallamuthu BL Research Bureau | Updated on July 24, 2020 Published on July 24, 2020

The rupee (INR), that closed flat for two consecutive days, has opened today’s session considerably lower against the dollar (USD). It began at 74.94 versus yesterday’s close of 74.75 and is now testing the crucial support of 75.

If the rupee breaches 75, the selling pressure can intensify. The immediate support below that level can be spotted at 75.15. Subsequent support can be 75.3. But if INR appreciates by taking support at current level, it can face a hurdle at 74.8. A breakout of this level can lift INR to 74.65.

Continuing with the recent trend, the Foreign Portfolio Investors (FPI) were net buyers on Thursday. As the net inflow stood at ₹1,740 crore (equity and debt combined), it increased to a little over ₹7,400 crore for the week. Despite considerable inflows, the rupee has largely been exhibiting bearish bias since past two days.

Dollar index:

The dollar index closed below the important level of 95 for second consecutive day, hinting that the bears retain their strength. Today, it registered a fresh 52-week low of 94.57 and is currently trading around 94.75. The index should rebound above 95 to bring back buying interest and until then, the likelihood of further weakening is high.

Trade strategy:

The rupee has been showing signs of moderation for the past couple of days. Following this, it has opened with gap-down today. But it is now hovering around the support of 75. So, traders can initiate fresh rupee short positions with stop-loss at 74.85 if it decisively breaches 75.

Supports: 75 and 75.15

Resistances: 74.8 and 74.65

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Published on July 24, 2020
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