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BL Research Bureau
The rupee (INR), after losing about one-tenth of a per cent yesterday, has opened with gap-up today against the dollar (USD). INR has begun the session at 75.49 versus Wednesday’s close of 75.59. Notably, 75.6 can be a support. That said, the exchange rate continues to remain within the range between 75.4 and 75.8.
If the rupee can rally past the resistance at 75.4, it will most likely advance to 75.15. Above that level, it might move to 75. However, if the local currency weakens on the back of the resistance at 75.4, it might find support at 75.6. A break below this level can drag the rupee to 75.8.
Foreign Portfolio Investors (FPI) have been selling a considerable amount of domestic assets this week. The net outflow of FPIs on Wednesday was ₹1,696 crore (equity and debt combined). With that, the tally for the week has risen to ₹5,633 crore. Continuation of this trend can exert more pressure on the domestic currency.
Dollar index:
The dollar index, which had been moving in a narrow range between 97.15 and 97.75, breached the support where it is currently trading around 97. While this level can be a support, the price action hints at more downside. Moreover, the index will be inclined to trend down until it stays below the resistance of 97.75. A break below 97 might result in a sharp downswing which can lift the Indian currency.
Trade strategy:
The dollar index indicates some weakness in the greenback. And the rupee, after opening higher, is showing a bullish bias. Hence, traders can buy the rupee on intraday declines with stop-loss at 75.65.
Supports: 75.6 and 75.8
Resistances: 75.4 and 75.15
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