The rupee (INR), after gaining some ground against the dollar (USD) in the second half of last week, has weakened a bit this week. Effectively, over the past week, the Indian currency has remained flat. On Tuesday, it closed at 82.76 against the greenback.
Downside pressure has come from foreign money outflows and crude oil prices, which have risen recently following the announcement of production cuts by Russia.
According to NSDL (National Securities Depository Ltd) data, the net FPI (Foreign Portfolio Investors) outflow in February so far stands at $0.7 billion and at $3.9 billion for year-to-date. Brent crude oil is now trading around $86 a barrel, compared to about $81 a week ago.
However, despite the above factors, the rupee has held well against the dollar.
Chart
The rupee, currently trading at 82.76, appears to be forming a price band between 82.40 and 83, within which it could stay in the coming week. In case INR breaks out of the resistance at 82.40, it might rally to 82 quickly. On the other hand, if it slips below 83, it could retest the all-time low of 83.29.
The dollar index (DXY), which rallied in the early part of this month, has lost momentum. It has been moving in the band of 102.70 – 104. The next swing in price will depend on which direction the DXY invalidates the range. Continued consolidation in the dollar can also keep the rupee flat.
Outlook
As the dollar remains flat, the rupee is not trending. The dollar index and the USDINR pair are charting a sideways trend. This is likely to stay true in the coming week as well. That is, the Indian currency is expected to trade in the range of 82.50 – 83 over the next week.