After registering an intraday low of 75.36, the Indian rupee (INR) appreciated on Wednesday to close with a gain of nearly 0.4 per cent against the US dollar (USD). It closed at 75.14 and so it still remains below the important level of 75.

The domestic currency opened with a gap down today at 75.23 versus yesterday’s close of 75.14. Though it looks bearish, 75.3 is a good support level. So, if the INR advances on the back of this support, it is likely to face a hindrance at 75.1, above which 75 is a strong resistance. But if the local currency slips below 75.3, it could fall to 75.5.

Foreign portfolio investors (FPI) net sold ₹221 crore yesterday (equity and debt combined), taking the net outflow for the week to ₹1,565 crore. This has been weighing on the rupee, and further selling can add more pressure dragging it down against the greenback.

Trade surplus

Government data released yesterday showed that India has registered a surplus in foreign trade in the month of June. The surplus stood at $0.79 billion, compared to a deficit of $15.3 billion in the same month previous year. The April-June period this year (deficit of $9.1 billion) has also been better, compared to last year (deficit of $45.9 billion). The improvement in the trade balance comes from a quicker fall in imports than in exports. A surplus means net inflow from trade, which is good for the rupee.

Dollar index

The dollar index continued to depreciate, ending below the support of 96.25 for the second day in a row, hinting at strong bearish traction. The index, currently trading at 96.1, has support at 96. A break below this level can intensify the sell-off. This can help lift the Indian currency against the dollar.

Trade strategy

The rupee, after opening with a gap-down, is hovering around 75.25. Since 75.3 is a support, it might gain from the current level. Hence, traders can initiate rupee long positions with tight stop-loss.

Supports: 75.3 and 75.5

Resistances: 75.1 and 75

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