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Today, the rupee (INR) began the session marginally higher at 75.53 versus Monday’s close of 75.59 against the dollar (USD). It remained weak yesterday and dropped throughout the session. Now hovering around 75.4, the rupee has dropped by about 5.6 per cent so far this year.
While 75.4 can be a hurdle for the local currency, the nearest support can be spotted at 75.7. A break below 75.7 can drag the rupee to 76. The key resistance above 75.4 is 75.
After turning net buyers for the first time this month on Friday, Foreign Portfolio Investors (FPI) dumped ₹4,363 crore yesterday (equity and debt combined). If selling resumes, the rupee could be exposed to significant downward pressure.
Dollar index
After declining for four consecutive sessions, the dollar index gained on Monday. But the trend is bearish and while it stays below 100, the likelihood of a recovery is low. If the index falls from the current market price of 99.3, the nearest support levels are 98.4 and 97.75; a fall in dollar demand would be favourable for the rupee.
Trade strategy
While the rupee trades below 75.4, it might be inclined to a bearish bias. So, one can be cautiously bearish on the domestic currency today. Traders can sell the rupee with stop-loss at 75.2
Supports: 75.7 and 76
Resistances: 75.4 and 75
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