The rupee (INR) seems to be witnessing some pressure since yesterday’s session, after facing the resistance at 75 against the dollar (USD). Compared to yesterday’s closing price of 75.47, the domestic currency has opened today’s session lower at 75.62.
Notably, 75.6 is a crucial support for the rupee. If it slips below that level, the local currency might attract more selling pressure, possibly dragging it to 75.8 and 76. But if the Indian unit takes support at 75.6 and appreciates, the potential hurdles are at 75.3 and 75.15
The rupee weakened on Wednesday even as the Foreign Portfolio Investors (FPI) were net buyers. Yesterday, the net inflow of FPIs stood at ₹1,851 crore (equity and debt combined). The FPIs have been pumping money into the domestic market since the beginning of this month and should this trend continue, the rupee can post sustainable gains against the greenback.
Dollar index
Extending the downtrend, the dollar index declined yesterday, closing at 97.32 versus the previous closing price of 97.62. It is now trading below the important level of 97.75 and as long as it remains so, the likelihood of further weakening is high. This can have a positive impact on the Indian currency. Currently trading at 97.5, the nearest support levels for the index are at 97.15 and 97.
Trade strategy
Even though the rupee has opened on a weak note, it has a considerable support at 75.6. Until the currency pair cracks this level, the rupee has good chance to bounce from current levels. So, on the back of the support at 75.6, traders can buy the rupee with stop-loss at 75.8. Risk-reward ratio too favours long positions at current levels.
Supports: 75.6 and 75.8
Resistances: 75.3 and 75.15
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Published on
June 04, 2020
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