Daily Rupee call: Rupee might strengthen

The rupee (INR) opened today’s session largely unchangedat 75.67 versus Monday’s close of 75.66. As the domestic currency has been consolidating between 75.6 and 76, and is now trading near the resistance at 75.6, it might weaken from current levels.

While 75.8 can act as a support, 76 is a critical base for the local currency. But if it can regain traction and rally past 75.6, there could be a sharp rally in the rupee.

Yesterday, Foreign Portfolio Investors (FPI) bought domestic assets for a significant amount. The net inflow of FPIs on Monday was Rs 4,716 crore (equity and debt combined). Despite this, the rupee was not able to breach the key level of 75.6. If the buying continues, the local currency could break out of that level soon.

Dollar index

The dollar index closed marginally lower at 99.02 yesterday, versus its previous close of 99.86. Currently trading at 99, it is hovering around the lower boundary of the range between 98.8 and 101. A decisive break below 98.8 can drag the index lower, which could be a positive for the Indian currency.

Trade strategy

Though the Indian currency is trading near the resistance of 75.6, the price action hints that it might rally for the day. Hence, traders can buy the rupee on declines for intraday with stop-loss at 75.8.

Supports: 75.8 and 76

Resistances: 75.6 and 75.4