The rupee remained flat against the dollar over the past week as it ended at 83.19 versus previous Tuesday’s close of 83.18. The Indian currency remained flat despite strong foreign inflows and a marginal dip in the dollar.

According to the latest National Securities Depository Ltd (NSDL) data, the net Foreign Portfolio Investors (FPI) inflows over the last week stood at around $1.5 billion. So far in December, the net inflow has been recorded at a whopping $9.5 billion, the highest monthly flows for 2023.

The dollar index moderated on the back of lower-than-expected growth number. The third quarter US GDP growth came in at 4.9 per cent against the expected 5.2 per cent. Despite these factors, the rupee was largely flat. Some market experts believe that the RBI might be buying dollars and piling up the reserves, which could have weighed on the local currency.

Chart

As the rupee closed at 83.19 on Tuesday, it continues to remain in the 83-83.50 range. Until INR moves out of this range, the next leg of trend will stay uncertain.

If the rupee gains from the current level and gets past the barrier at 83, it can advance to 82.65. Above this level, it can appreciate to 82.50 quickly.

On the other hand, if the local currency slips below the support at 83.50, it can witness a quick fall to 84, a potential support. Subsequent support is at 84.25.

The dollar index (DXY), by closing at 101.70, made a lower low. This has increased the probability of further fall. The nearest support from the current level are at 101 and 100. A drop in DXY can give some upward pressure on the rupee.

Outlook

Although fundamental factors like the foreign inflows and weak dollar are positive for the rupee, it continues to trade within the 83-83.50 range. In the coming week, it is likely to remain within this price band.

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