PremiumThe rupee weakened against the US dollar for the second day straight on Tuesday. The local unit inched closer to the psychological mark of 82. The domestic currency is expected to be under pressure on the back of feeble Asian peers, dwindling upside momentum, and buying in the greenback. However, this week, the rupee is seen to range between 81.20 to 81.80 levels against the dollar.
On Tuesday, in the early trade, the rupee weakened to 81.8375 against the US dollar. The currency fell to as low as 81.89 against the dollar in the opening deals.
On the previous day, the rupee recorded its biggest single-day fall in percentage terms since December 15 last year to end at 81.6125 from last week's closing of 81.3250. On January 13, the rupee saw its best gains in two months.
According to Reliance Securities' note, the Indian Rupee depreciated against the US dollar on Monday, tracking a fall in the Chinese yuan and dollar buying from state-run banks probably on behalf of the Reserve Bank of India. The Rupee settled at 81.6125 per dollar, 0.35% weaker than its previous close of 81.3250, and posted its biggest single-day percentage fall since December 15. The Rupee also weakened as stop-losses were also being triggered, while foreign portfolio outflows also kept the bias weak. Additionally, lower premiums would drive importers and foreign currency liability holders to increase their hedges.
The brokerage expects the bias to remain bearish for the pair USD/INR on Tuesday where immediate support can be seen near 81.30 with a resistance of 82.
ICICI Direct's note said that US$INR is likely to face resistance near 81.80, followed by 82.00, and decline towards the initial supports at 81.30 and 81.10. At the upper end, the 50-day EMA at 82 would act as key resistance for the pair.
Further, on Tuesday, Anand James - Chief Market Strategist at Geojit Financial Services said, "Expect a brief consolidation early in the day, followed by yet another attempt to push higher towards 82.1. However, inability to hold slippages within the 81.59-81.50 region might rekindle downside moves again."
Last week, the rupee gained by at least 1.7% against the dollar supported by broad weakness in dollar and a firm trend in domestic equities. The greenback slipped to a nearly nine-month low against the euro after easing in the US inflation prompted bets that the Federal Reserve will be less aggressive with rate hikes in the forthcoming monetary policies.
For the current week, Religare Broking in its note said, Biasness of this week remains sideways. As a weekly strategy, long positions can be initiated on dips around the 81.30 mark (Spot) for upside targets of 81.80 keeping stops below the 81.05 mark."
This week, economic data will be rolled out from the UK (CPI, Retail Sales, and Unemployment reports), China (Q4 GDP and Industrial Production), Japan (CPI, Industrial Production, Trade data), and the US (PPI and Weekly Jobless claims).
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