There was little respite for the rupee over the past fortnight. The currency was pulled down by weak industrial production, a deficient monsoon, worsening current account deficit and galloping crude oil price. The negatives outweighed the positives — moderation in inflation, and encouraging statements from the new Finance Minister to revive growth and foreign investment. Over the last couple of weeks, the rupee lost 0.5 per cent against the US dollar and currently trades at 55.78/dollar. Against the Euro too, it lost 0.3 per cent to trade at 68.51. In the global market, the Euro gained against the US dollar during the last two weeks and currently yields around 1.228 dollars per piece. The dollar index meanwhile shed 0.4 per cent and trades at 82.71.

Domestic woes

India’s industrial output in June fell 1.8 per cent, underlining worries on the growth front. Adding to the pressure was the increase in current account deficit, with exports in July falling much faster (around 15 per cent year-on-year) compared to the fall in imports (7.6 per cent). This could worsen further with the price of crude oil rising steeply over the fortnight. Brent crude price, at $117 a barrel, is up around 10.5 per cent. This, along with worries about the drought situation is likely to keep the rupee under strain.

Dollar-rupee

Rupee declined further against the dollar to hit the low of 56 on Thursday. The short-term trend in the currency pair is sideways in the band between 54.7 and 56.3. Immediate support is at 56.1 and 56.6. The currency could reverse higher from 56 level and move up towards 55 again. But a sharp move below 56.6 will drag it to 57.3. Medium-term trend for rupee continues to be down. The sideways move that is on currently appears to be a halt before the currency moves below 57.3. Medium-term view will turn positive only on close above 54. Subsequent resistances are at 52.9 and 51.9.

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