On Tuesday, the rupee (INR) strengthened by 0.2 per cent against the dollar (USD) to end at 82.66. Thus, the exchange rate of the Indian currency remains range-bound between 82.40 and 83. Nevertheless, on the back of a weak domestic market and risk aversion, the broader bias remains negative for the rupee.

While the dollar has been appreciating since the beginning of last week, crude oil prices have seen an uptick in the last few sessions. Also, FPI (Foreign Portfolio Investors) flows have been negative over the past three sessions. According to NSDL data, the net outflow in the last three sessions stands at nearly $513 million. Prolonged downward pressure through these factors in the coming sessions can pull the domestic unit below the 83-mark.

Chart

The rupee, currently trading at nearly 82.66, continues to consolidate within the price band of 82.40–83. Technically, the direction of breach of this range will tell us the next potential move. But as it stands, the likelihood of a breach of the support at 83 looks high.

In such a case, we could see the local currency falling towards 83.30. The downswing could even extend to 83.50. On the other hand, if INR rallies past 82.40, it can appreciate to 82 quickly.

The dollar index, which closed last week on a strong note, has now seen a minor dip to 104.7. But the price action is bullish, and we might see a breach of a minor resistance at 105.40 leading to a rally to 107 in the near-term. This can weigh on the Indian unit.

Outlook

Although the charts show a flat trend, the bias is bearish, and we might see a breach of the support at 83. If this occurs, we could see INR depreciating to 83.30. So, overall, the rupee will either stay within the 82.40–83 range or see a fall to 83.30 this week.

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