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The rupee (INR) settled with a loss of 17 paise against the dollar (USD) on Tuesday, closing at 73.46 versus 73.29 – the close on the preceding day. The local currency has a support at 73.5 and if it advances on the back of this support today, INR could face hurdles at 73.3 and 73.15. Above 73.15, the resistance level is 73. On the other hand, if the domestic unit weakens below 73.5, it might decline to 73.7 with subsequent support at 74.
Foreign Portfolio Investors as well as the market remained broadly positive on Tuesday. The net inflow stood at about Rs 1,100 crore (equity and debt combined), taking the tally for the week to nearly Rs 1,340 crore. Despite this, the rupee depreciated yesterday. However, if FPIs continue to pump in money, INR could strengthen against USD.
Dollar index
The dollar index gained yesterday, recouping the loss it registered on Monday. But it remains below the crucial level of 94 and while it stays at that level, the likelihood of the index declining is high. While 93.65 – the 21-day moving average – can be the immediate support, a breach of this level can drag the index lower to 93.25. Subsequent support is at 93.
Trade strategy
The rupee began today’s session on a flat note and is hovering at the support of 73.5. Since this is a support level for the rupee and the dollar index looks weak, traders were bullish on the local currency intra-day. Hence, buy INR with a tight stop-loss.
Supports: 73.5 and 73.7
Resistances: 73.3 and 73.15
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