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The rupee (INR) closed Wednesday’s session at 73.11 versus its previous close of 73.18 against the dollar. Today, it opened flat at 73.10, thus moving above 73.15 – a support turned resistance. If INR firms up further, it can appreciate to 73.00. A breakout of this level can take the local currency to 72.75. But if it weakens and slip back below 73.15, it is likely to decline to 73.25 and possibly to 73.40.
Foreign portfolio investors (FPI), who were net buyers since the beginning of the week, did not find interest yesterday. In FPI net outflows stood at ₹484 crore (equity and debt combined) on Wednesday. However, this amount is not very significant compared to the recent inflows.
Dollar index
The dollar index made a fresh low of 89.21 in the last session, before ending the day on a flat note. Today, it opened lower at 89.36 versus the preceding session’s close of 89.53. The overall trend remains bearish and the index is likely to decline from the current levels. This can be positive for the Indian currency.
Trade strategy
Though INR closed below the support of 73.15 on Tuesday, it recovered and is currently trading around 73.10. The price action hints at rupee appreciation and so, traders can initiate fresh long positions with a tight stop-loss.
Supports: 73.25 and 73.40
Resistances: 73.00 and 72.75
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