The rupee (INR) ended flat on Tuesday at 81.9163 against the dollar (USD). In line with our expectations, it remains within the key levels of 81.60 and 82.15. While there was some downward pressure in the first half of last week leading to INR briefly slipping below the support at 82.15, it managed to recover to the current level of 81.9163 despite negative foreign inflows.
According to the NSDL (National Securities Depository Limited) data, the net FPI (Foreign Portfolio Investors) outflow stood at $287 million over the past week. However, for the current month, the flows are positive at $825 million.
Editorial.Ringfencing the rupee
As it stands, the risks seem to be evenly balanced and thus, the rupee is likely to stay within the above-mentioned range.
Chart
The rupee appears trendless in the near-term as it lies between a couple of important levels. Unless the local currency moves out of the 81.60-82.15 range, we cannot confirm the next leg of trend. A breakout of 81.60 can result in the domestic unit quickly gaining to 81.10. On the other hand, if INR depreciates from here and falls below the support at 82.15, we might see a decline to 82.50.
Read: Where is the rupee headed in 2023?
The dollar index (DXY) is currently range-bound, oscillating between 100.80 and 102.20. But the broader trend is bearish for DXY. If the bears regain strength and drag it below 100.80, it could swiftly fall to 99.25. But if there is a recovery leading to the breach of the hurdle at 102.20, the dollar index could rally to 103.50.
Outlook
As it stands, the probability of the rupee moving on either side is the same. But the range of 81.60-82.15 remains valid. We expect this to remain relevant in the coming week as well. So, do not expect a sharp move in the USDINR pair this week.