Technical Analysis

Rupee: Sell-off can intensify below 76.55

Akhil Nallamuthu, BL Research Bureau | Updated on April 13, 2020

The rupee (INR) has witnessed a flat opening today at 76.27 versus last week’s close of 76.29 against the dollar (USD). Last Thursday, the domestic currency registered a fresh lifetime low of 76.55 before recouping some of its losses. As long as the rupee remains above 76, it can be bearish and face more selling pressure.

On the downside, the rupee might retest the all-time low again, below which it might depreciate to 77. Whereas, if the local currency can shift the tide in its favour, 76 will be a critical resistance. Subsequent hurdle can be spotted at 75.7

According to the data by National Securities Depository Limited (NSDL), the FPI outflow for the current month stands at ₹8,614 crore (equity and debt combined). The rupee can face further downward pressure if the FPIs continue to sell.

Foreign reserves:

The weekly statistical supplement released by the Reserve Bank of India (RBI) last Friday showed that the foreign reserves have marginally dropped between March 27 and April 3. As per the report, the reserves have come down by nearly $1 billion i.e. the total reserves decreased to $474.6 billion from $475.6 billion. Foreign Currency Assets (FCA), the largest component of the reserves is down by around $0.6 billion to $439.1 billion from $439.7 in the same period. The value of gold holdings came down slightly to $30.5 billion compared to previous week’s $30.9 billion. Nevertheless, the change in reserves were not significant.

Dollar index:

The dollar index moderated last week and closed below the key level of 100. Also, it has slipped below the 21-day moving average. The price action hint that the index could soften further, with the nearest support at 99 – 50-day moving average. A fall in the dollar index might aid the rupee to gain some ground.

Trade strategy:

The rupee has come down to 76.41 after beginning the session on a flat note today. A break below its prior low i.e. 76.55 can intensify the sell-off. So, for intraday, traders can sell rupee with stop-loss at 76.3, if it breaches 76.55

Supports: 76.55 and 77

Resistances: 76 and 75.7

Published on April 13, 2020

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor

You May Also Like