Technical Analysis

Daily Rupee call: INR might depreciate intraday

BL Research Bureau | Updated on September 15, 2020 Published on September 15, 2020

The rupee (INR) yesterday, settled on a flat note at 73.48 despite witnessing higher volatility against the dollar (USD). Today it has opened slightly higher at 73.37. Nevertheless, the price action of the past few trading sessions show that the rupee has been moving in a sideways trend between 73.3 and 73.6.

If the local currency breaks below the support of 73.6, it has an immediate support at 73.7. Subsequent support is at 74. But if the rupee rallies above 73.3, it will face a hurdle at 73.15, above which lies the strong resistance of 73.

Foreign Portfolio Investors (FPI) were net buyers yesterday as the net inflow stood at ₹298 crore (equity and debt combined). If this trend continues in the forthcoming sessions, it can help the rupee gain ground against the dollar.

The Consumer Price Index (CPI) inflation for August was recorded at 6.69 per cent, marginally lower compared to revised estimate of July’s 6.73 per cent, according to the data by the Ministry of Statistics and Program Implementation (MoSPI). However, it has been above the Monetary Policy Committee’s targeted level for five straight months, reducing the hope of rate cut. This was mainly driven by food items. The Consumer Food Price Index (CFPI) stood at 9.05 per cent in August as against 9.27 per cent a month before. Higher inflation is not good for the currency.

Increasing WPI inflation

The Wholesale Price Index (WPI) inflation entered the positive territory in August after staying below the zero-level for the preceding four months. It stood at 0.16 per cent in August against minus 0.58 per cent in July. It has been consistently going up in the last four months and a sharp rise if any can be negative for the domestic currency.

Dollar index

The dollar index, that closed without any significant movement on Monday, has begun today’s session on the weak foot. It is currently testing the 21-day moving average support at 92.9. A break below this level can drag the index lower, possibly to 92.5 and then 92. A weak dollar is good for the Indian currency.

Trade strategy

The rupee is currently moving in a sideways trend and unless either of 73.3 or 73.6 are breached, the next leg of trend will remain uncertain. Now that INR is trading near 73.3 (a resistance level), traders can short rupee with a tight stop-loss for intraday.

Supports: 73.5 and 73.6

Resistances: 73.3 and 73.15

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Published on September 15, 2020
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