Daily Rupee call: INR likely to extend gains

BL Research Bureau

Despite a gap-down open last session, the rupee (INR) recovered and ended the session with a marginal gain at 73.76 versus its previous close of 73.84 against the dollar (USD). Thus, the exchange rate of USDINR continues to tread within the price band between 73.50 and 73.85. Either of these levels should be breached for the currency pair to start trending.

Today, INR has opened higher at 73.66 extending last session’s gain. If it continues to trend up, it can find a hurdle at 73.50, above which 73.40 can be a resistance. Subsequent resistance can be seen at 73.15. But if the domestic currency weakens and depreciate, it can find an immediate support at 73.85. Below that level is the key base of 74.

Following a sell-off on Monday, the market has recovered sharply in the subsequent sessions. As the market sentiment turned positive, the net flow of foreign portfolio investors (FPI) became positive. The net investments on Wednesday stood at ₹536 crore. Thus, the net inflow for the week has increased to nearly ₹1,370 crore. This trend is likely to continue pushing up INR against USD.

Dollar index

The dollar index has been witnessing a zig zag price movement in the past couple of trading sessions. Apparently, there is no definite trend. Nevertheless, the index stays below the critical level of 91 and the major trend is bearish. So, the likelihood of a decline looks high with nearest supports at 90 and 89.75. A fall in the dollar index indicates a weak dollar, a conducive set-up for the rupee bulls.

Trade strategy

The rupee has begun today’s session on the front foot at 73.66. Considering that the price action looks favourable to INR and that the dollar index is trading lower compared to last session, the rupee will most probably appreciate further. Hence, traders can buy INR for intraday with a stop-loss at 73.85.

Supports: 73.85 and 74.00

Resistances: 73.50 and 73.40