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The rupee (INR) witnessed significant downward pressure on Monday and registered a fresh one-year low of 72.73 against the dollar (USD). Foreign Portfolio Investors (FPIs) net sold ₹5,531 crore in equity and debt combined yesterday, according to National Securities Depository Ltd (NSDL) data.
The Indian currency has thus broken below the range between 70.5 and 72.25, within which it has oscillated for seven months. Going forward, as long as the rupee trades below 72.25, it will face selling pressure on rallies.
If the local currency extends the decline, it has a support band between 72.9 and 73. Below that level, 73.3 could serve as a good support. On the other hand, if it recovers, 72.46 and 72.25 could be considerable resistances.
Dollar index
The dollar index tumbled and slipped below its 50-day moving average yesterday, turning the trend bearish. It broke below the support at 97.75 and ended Monday’s session at 97.36, compared to its previous close of 98.13. Currently trading at 97.47, support levels can be spotted at 97.35 and 97.2, whereas the nearest resistance is at 97.75. A decline in the index could be favourable for the Indian currency.
Trade strategy
The rupee opened higher at 72.47 today, against its previous close of 72.73. But it has considerable hurdles at 72.46 and 72.25; also, while it trades below 72.25, the likelihood of it facing downward pressure is higher. Thus, traders can sell the rupee on rallies with stop-loss at 72.25.
Supports: 72.9 and 73
Resistances: 72.46 and 72.25
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