The rupee (INR) closed with a marginal loss at 73.93 against the dollar (USD) on Thursday. Though it slipped below the support of 73.85, it managed to hold above the critical support of 74. Today, the rupee opened with a gap-up at 73.81 and following the RBI’s statement on the repo rate, it has not changed much as the decision was in line with expectations.
If the rupee strengthens from the current level, it could face a hurdle at 73.70. A breach of this level can take INR to 73.50. But if the domestic currency weakens from here, it could find support at 73.85 and 74. A break below 74 can intensify the sell-off and so, this is an important level for rupee bulls.
Even though the market declined after a gap-up open yesterday, Foreign Portfolio Investors (FPI) were net buyers on Thursday. Their net investments stood at ₹3,637 crore. But despite this, the rupee closed with a loss yesterday. However, 74 is a strong base, which can arrest the decline.
Dollar index
Extending the downtrend, the dollar index posted a loss of nearly half a per cent as it ended the last session at 90.71. It marked a fresh low of 90.51 in the last session – the lowest point in more than two years. The bears look strong and the index can be expected to depreciate further from the current level and drop to 90 – a considerable support. Below this level, it can fall to 89.5. The weakness in dollar, as indicated by the dollar index, can lift the Indian currency.
Trade strategy
The rupee has begun today’s session on the front foot by opening with a gap-up. It also lies above the crucial support of 74. The dollar index continued to weaken and the outlook for the greenback is bearish. These factors are positive for INR. However, traders should tread with caution since the currency pair USDINR can witness higher volatility today because of the monetary policy announcement.
Supports: 74 and 74.25
Resistances: 73.70 and 73.50
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.