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The rupee (INR) has opened flat today at 76.21 against the dollar (USD). The local currency, which closed below the support of 76 yesterday, seems to be carrying the bearish bias today as well. It is best to exercise caution as long as it remains below 76.
Currently trading at 76.2, the domestic currency has its immediate support at 76.3. Below that level, the support is at 76.5. But if the rupee recovers, 76 can be a major hurdle. A rally above that level can take the exchange rate to 75.8. Subsequent resistance is at 75.6.
Yesterday, Foreign Portfolio Investors (FPI) were net sellers, acting as a dampener on the rupee. The net outflow of FPI on Tuesday was nearly ₹1,480 crore (equity and debt combined), taking the tally to ₹4,440 crore in the last two trading sessions. If this sentiment prevails, the rupee is likely to witness more downward pressure.
Dollar index
The dollar index gained yesterday closing the session at 97 versus previous close of 96.7; it is currently hovering around the important level of 97. If the index manages to stay above that level, it might attract good buying interest taking it further up, which can weigh on the rupee. The nearest resistance is at 97.75. But if it declines, it might moderate to 96.25.
Trade strategy
The rupee closed below the support of 76 yesterday; also it seems to extend the decline further as hinted by the price action. So, traders can sell the rupee on intraday rallies with stop-loss at 75.9.
Supports: 76.3 and 76.5
Resistances: 76 and 75.8
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