The rupee (INR) settled 12 paise lower yesterday at 73.04 versus ‘the previous day’s close of 72.92. Thus, the local currency has slipped back below the 73.00-mark. However, the breach of the support does not look decisive and so INR can make a recovery today.

Following this, the rupee opened flat at 73.03 today. If it recovers from here and crosses 73.00, it can appreciate to 72.75, a resistance level. Should this level be breached, it can rise to 72.50. But if INR declines, the nearest support would be 73.15. Subsequent support is at 73.25.

As the market extended the downswing on Thursday, foreign portfolio investors (FPIs) dumped a considerable amount of domestic assets. The net outflow yesterday stood at ₹3,712 crore. Thus, the net outflow for the week has risen to nearly ₹6,200 crore. If selling by FPIs continues, it can weigh on the Indian currency considerably.

Dollar index

Facing resistance at 91.00, the dollar index fell to close at 90.46 yesterday, versus the preceding close of 90.65. Thus, it continues to remain within the sideways range of 90.00 and 91.00. Unless the index moves out of the range, the next phase of the trend will remain uncertain. Notably though, the major trend is bearish. Possibly, a breakout of 91.00 can turn the short-term trend positive.

Trade strategy

The rupee has opened flat and is hovering at the key level of 73.00. The domestic unit seems to lack direction and can stay flat today. Today’s possible trading range can be 72.90 and 73.05. Thus, traders will be better off avoiding initiating fresh positions.

Supports : 73.15 and 73.25

Resistances: 72.75 and 72.50

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