Weekly Rupee view: Rupee stays range-bound

Akhil Nallamuthu |BL Research Bureau | Updated on: Jun 21, 2022
The rupee has dropped by 5 per cent against the greenback year-to-date

The rupee has dropped by 5 per cent against the greenback year-to-date | Photo Credit: RAGHUNATHAN SR

The domestic currency is not appreciating despite softening dollar 

The Indian rupee (INR) was down by 10 paise on Tuesday as it closed at 78.08 against the dollar (USD). While there have been no major price swings over the past one week, the rupee remained one of the strongest Asian currencies in June so far by losing 0.45 per cent. The INR is only behind the Chinese Yuan and the Hong Kong dollar. A drop in crude oil prices over the past couple of weeks is a favourable factor for the rupee. Currently at around $115.8 a barrel, Brent crude is down by nearly 8 per cent from its recent peak.

Despite that, the rupee has not appreciated. Unabated selling by the Foreign Portfolio Investors (FPI) has been weighing on the local unit. According to the latest available data with NSDL (National Securities Depository Limited), the net outflows in June stood at $5.2 billion, taking the net outflows for the year so far to $28.4 billion. This is largely the reason for the rupee to stay subdued even as the dollar has been on the weak foot in the past week.

The rupee has dropped by 5 per cent against the greenback year-to-date.


The rupee has been treading in a tight range of 78-78.10 over the past week. The INR should move out of this range for us to get a clue in which direction the next trend could be established. But note that the overall trend has been bearish and the recent weakness in the dollar has not lifted the domestic currency. Therefore, the upside may be limited to 77.70 or 77.50. Below 78.10, it can decline to 78.30 and probably to 79.

The dollar index (DXY), after hitting a fresh multi-year high of 105.8 last week, has pulled back to the current level of 104.1. While the overall trend is bullish, the recent price action hints at the possibility of DXY staying sideways for some time, probably between 103 and 105.


The near-term outlook is unclear as the rupee is currently stuck in a tight range. Also, the dollar index is indicating a possible consolidation. Therefore, the USDINR currency pair is expected to stay in a range, possibly between 77.80 and 78.10 in the near-term. That said, the overall trend of the rupee is bearish and the likelihood of the INR breaching the support at 78.10 is high.

Published on June 21, 2022
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