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The rupee remained stable in the past week. The currency traded in a narrow sideways range between 66.68 and 66.90.
The currency closed flat for the week at 66.72 on Monday. Neither the US President Donald Trump’s speech nor domestic growth numbers caused any move in the currency. Both events, which were widely anticipated to trigger some volatile move in the currency, turned out to be non-events.
The Indian rupee has managed to remain steady despite the sharp intra-week rise in the dollar index. The index surged to a high of 102.25 by Thursday and has come off from there, giving back some of the gains, to trade at around 101.6.
All eyes are on the US Federal Reserve, which will decide on its policy interest rate next week on March 15 (Wednesday). Markets are largely factoring a rate hike in this month’s meeting.
US Fed Chair Janet Yellen in her speech on Friday also hinted at the higher likelihood of an interest rate hike at its meeting next week. This event may keep the rupee under check.
The dollar index has key resistance in the 102-102.20 zone. A strong break and a decisive close above 102.20 can boost the momentum. Such a break will see the dollar index surge to 103 or even 103.5 thereafter.
Despite a strong dollar, the near-term view for the rupee remains positive on the charts. Immediate resistance is between 66.70 and 66.65.
Strong breakThe rupee, to lose momentum, will need a strong break and decisive daily close below 67. I
n such a scenario, the currency may come under pressure and decline to 67.20 and 67.50.
It will also reduce the possibility of the rupee reversing higher thereafter.
On the other hand, if the rupee manages to break above 66.65 in the coming days, it can strengthen to 66.50 immediately. Further break above 66.50 will see the rupee moving higher to 66.40 or 66.30 thereafter.
The region between 66.10 and 66 is a crucial resistance for the currency. Inability to break above 66 will keep the broader 66-68.85 range, which has been in place for more than a year now, intact.
The possibility of the rupee strengthening beyond 66 is low now as the currency will need some strong trigger to break this level of 66. A reversal from 66 will then increase the likelihood of the rupee falling to 67 and 68 levels over the medium term.
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