The rupee (INR) depreciated by nearly 0.45 per cent on Tuesday to end at 82.4950 versus the dollar (USD). Although the Indian unit closed almost flat last week, it has come under pressure early this week as the market sentiment weakened following the collapse of the Silicon Valley Bank.
While there have been good foreign inflows in the first week of this month, the FPIs (Foreign Portfolio Investors) took some money off the table over the last week. As per the latest NSDL (National Securities Depository Ltd) data, the net outflow over the past week stood at nearly $0.6 billion. Therefore, not just the rupee, the Indian equity segment is also facing the heat.
Going forward, the market mood, at least in the near-term, is expected to be not so encouraging. Thus, the local currency might be under pressure this week.
The rupee which marked a one-month high of 81.62 last Monday, has now weakened to the resistance-turned-support level of 82.40. For most part of February, the rupee was trading in the range of 82.50 – 83 before rallying to hit the high of 81.62. If the support at 82.50 is breached, the rupee will probably fall towards the key level of 83. On the other hand, if there is a recovery off 82.50, which is less likely, it might rise to 82.
The dollar index (DXY) is now trading within the support band of 103.50 – 104. If this support holds and DXY bounces, it can rally to 105.7 in a week. Or if DXY falls below 103.50, a good scenario for the rupee, it could depreciate to 102 in the short-term.
The rupee is now trading near a support. But the market sentiment is weak, and this can weigh on the local currency. We expect both the factors to be evenly balanced leading to a potential sideways movement in the coming week. The range could be 82.15 – 82.70.
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.