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The Indian rupee (INR) lost about 0.3 per cent on Tuesday against the US dollar (USD) as it closed at 75.42 versus the previous close of 75.19.
Having opened marginally higher at 75.34 today, it is facing a resistance at 75.3. If this level is taken out, INR can appreciate to 75.15. Subsequent resistance is at 75, a critical level. But if the local currency weakens, it could slip to 75.5 and then possibly to 75.6.
Foreign portfolio investors (FPIs) were sellers on Tuesday, which weighed on the rupee. The net outflow on Tuesday stood at about ₹1,565 crore (equity and debt combined). Further outflow can pull down the Indian currency.
Dollar index
The dollar index declined on Tuesday and closed below the support level of 96.25, opening the door for further depreciation. While 96 can be the immediate support, a break below that level can drag the index to 95.7. A drop in the index can be a positive factor for the rupee.
Trade strategy
Though the rupee has opened marginally higher, the trend stays inclined downwards. Also, 75.3 can be a considerable hurdle. Hence, traders can sell the rupee with a tight stop-loss for the day.
Supports: 75.5 and 75.6
Resistances: 75.3 and 75.15
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