Forex market in India was enthused by the central bank's move to cut CRR, sending the rupee above 50 against the dollar. The currency has gained 8 per cent since its December 15 trough at 54.3. Conducive macro economic data including fall in headline inflation and strengthening industrial production and robust foreign portfolio inflows have aided the currency's appreciation.

According to SEBI, foreign institutional investors have net purchased equity worth $1.3 billion and debt worth $3.1 billion in secondary market so far this calendar.

Mood in global forex market remained cautiously optimistic ahead of the Federal Reserve's monetary policy meeting scheduled this week. Dollar index continued to move lower as risk appetite among global investors rose. We continue to watch the support at 79. Breach of this level can take the index to 78.2 or 77.4.

Dollar-rupee outlook: Rupee moved slightly above the 50 mark on Tuesday but it closed the session below this level. As explained last week, the zone around 50 is an important resistance from medium-term perspective. If it moves below this level again in the upcoming sessions, it can decline to 51.5 or 52.5 in the weeks ahead.

Conversely move above 50 will mean that the up-move can accelerate to pull the currency to 49 or even 47.8 in the upcoming months. Long-term view will turn positive on a move above 47.8.

For the week ahead, rupee will receive support at 50.6, 50.8 and 51. Reversal from either of these level will mean that the currency will have make another attempt to move above the 50 mark.

USD-INR futures contract declined below our short-term target to the low of 49.9 on Tuesday. Traders can sell in rallies as long as the contract trades below 51.4. If the down-move continues, subsequent targets would be 49.1 and 48.8.

Resistances above 51.4 would be 51.9 and 52.3.

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