Technical Analysis

Daily Rupee call: INR likely to decline further

Akhil Nallamuthu | Updated on July 01, 2020 Published on July 01, 2020

The Indian rupee has an immediate resistance at 75.4; a break out this level can attract considerable buying interest

BL Research Bureau

The rupee (INR) has opened on a flattish note today at 75.52 versus yesterday’s close of 75.5 against the dollar (USD). Thus, the exchange rate remains within the range of 75.4 – 75.8; unless it remains so, the next leg of trend cannot be confirmed.

The domestic currency has an immediate resistance at 75.4; a break out this level can attract considerable buying interest. Subsequent resistance can be spotted at 75.15. But if the rupee declines on the back of the resistance at 75.4, it is likely to find support at 75.6 and 75.8.

Foreign Portfolio Investors (FPI), who have been sellers on Monday, continued to sell yesterday as well. The net outflow of FPIs on Tuesday stood at ₹2000 crore (equity and debt combined), already taking the tally for the week to ₹3,937 crore. If this trend continues, it can spell trouble for the rupee.

Balance of Payments (BoP)

Yesterday, the Reserve Bank of India (RBI) released the Balance of Payments (BoP) data for the fourth quarter of 2019-20. According to the statement, the Current Account Deficit (CAD) marked a surplus of $0.6 billion in Q4 of 2019-20 compared to a deficit of $4.6 billion in Q4 of 2018-19. In Q3 of 2019-20, the deficit stood at $2.6 billion. Although an improved BoP number can be positive for the rupee, one should be cautious since it has come against the backdrop of reduced economic activity.

Dollar index

The dollar index continues to trade in a narrow range, i.e. between 97.15 and 97.75. Notably, 97.75 is a significant hurdle, and until the index remains below that level, it can be inclined to downtrend. On the other hand, a breakout of that level can turn the outlook bullish for the greenback.

Trade strategy

The rupee continues to trade in a range, and it is now hovering near the resistance of 75.4. While a breakout of this level can be bullish for the Indian currency, it is likely to remain weak until it stays below it. So, for intraday, traders can sell rupee with a tight stop-loss.

Supports: 75.6 and 75.8

Resistances: 75.4 and 75.15

Published on July 01, 2020
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