Weekly Rupee View: INR exhibits positive inclination

The rupee (INR) rose slightly on Tuesday, closing at 82.37 against the dollar (USD). However, it rose over the past week by about a third of a percent, compared to the previous Tuesday’s closing at 82.60.

Foreign inflows helped the rupee to rise. According to NSDL (National Securities Depository Limited) data, net inflows of FPI (foreign portfolio investors) over the past week were about $420 million in June so far, net inflows are just over $1.4 billion. Also, the decline in the price of crude oil has also helped the Indian currency because of their inverse relationship. Over the past week, Brent crude futures have fallen more than 4 percent and are now around $73 a barrel.

Note that on Wednesday night, the US Federal Reserve will come out with its monetary policy. The Federal Open Market Committee’s economic forecasts will also be released. It is likely to have a significant impact on the USD/INR pair and we may see increased volatility.

Schedule

Although the rupee has risen over the past week, it is still in the range of 82.25 – 82.60. If the local currency rises further and crosses 82.25, it can rise to 82 – which is a strong resistance. Subsequent resistance is between the 81.70-81.60 price range.

On the other hand, if the INR drops from here, the nearest support it can find is at 82.60 and 82.85. Below is an important level of 83.

The Dollar Index (DXY), for the past two weeks, has been slowly declining. It met resistance at 104.50 in early June and has now fallen to 103.30. Price action suggests that it could drop further, possibly to 102.50. In such a situation, the INR can go up to 82.

prospects

We may witness higher volatility this week, especially after the US Federal Reserve’s announcement. However, as it stands, the bias is technically positive for the rupee. We expect the price to surpass 82.25 and touch 82.10 during the next week.