Weekly Rupee View: INR nears crucial support level, fuelling potential corrective rally

The rupee (INR) was largely flat on Tuesday, closing at 82.8025 against the dollar (USD). However, over the past week, it has fallen as the dollar has risen. The local currency fell despite lower crude oil prices and strong capital inflows.

According to NSDL (National Securities Depository Limited) data, FPI (Foreign Portfolio Investors) net inflows over the past week amounted to just over $1 billion. To date, the net inflows are $3.9 billion. Also, Brent crude remains an important low of $78 a barrel.

Despite the above, the weakness of the rupee can, at least in part, be attributed to the potential accumulation of dollars by the Reserve Bank of India (RBI), experts suggest. It is noteworthy that foreign reserves rose to about $600 billion as of May 12, recording an increase of about $3.6 billion over the previous week.


The rupee has fallen below the support at 82.30 as we warned last week. It is currently hovering in the critical support area 82.80-83.

While it is still too early to predict a bullish reversal for the rupee, there is a possibility of a slight uptick in the local currency. It could rise to 82.60 from its current level. Resistance above 82.60 lies at 82.40. However, if the INR breaks below 83, we could see a quick drop to 83.25/30.

The Dollar Index (DXY) rose as high as 103.62 last week and is currently hovering around 103.40. The trend appears positive. If DXY crosses the previous high at 103.62, it can rise to 105. In this case, the rupee may breach the support at 83.

On the other hand, if there is a corrective decline from the current level, DXY may drop to 102.70. If this happens, the INR could see a temporary rise to 82.60.


Of course, a strong dollar can weigh on the local currency. However, at the moment, the rupee is trading near the crucial support level at 83, which it has bounced against several times since October last year. Therefore, there is a chance for the Indian Rupee to see a corrective rise to 82.60 this week.

However, participants should not be overly optimistic. We recommend maintaining the cautious bullish stance for the rupee as long as it stays above the key support level at 83.