Comments
The rupee, stuck in a narrow range between 64 and 64.15 through last week, managed to break this psychological hurdle of 64 on Monday.
The currency opened with a gap-up on Monday and touched a high of 63.86 before closing at 63.91.
The dollar index fell sharply on Friday after the much-awaited speech from the US Federal Reserve Chair Janet Yellen and the European Central Bank (ECB) President Mario Draghi.
The ECB President, as against market expectations, did not raise any concern on the recent strength in the euro. This helped the euro surge to 1.18 on Friday from 1.17. On the other hand, Janet Yellen failing to give any hint on future rate hike plans was a negative for the dollar.
Both these factors together dragged the dollar index sharply lower over a per cent on Friday to 92.25 from around 93.25.
The dollar index is currently hovering above a crucial support level of 92.40. A break and decisive close below this support may increase the downside pressure.
In such a scenario, the index can fall to 92 initially. Further break below 92 can drag it to 90.5 thereafter. Such a fall in the dollar index can aid in taking the rupee further higher from current levels.
On the other hand, if the dollar index manages to sustain above 92.4, it can move up to 93 in the coming days. Further break above 93 will see the upmove extending to 94 levels thereafter.
Data watchThe coming week is packed with a series of important macroeconomic data releases, both on the domestic and global fronts.
US second quarter GDP growth data is due for release on Wednesday. This will be followed by non-farm payroll and unemployment data on Friday.
On the domestic front, the GDP data for the first quarter of this fiscal is due for release on Thursday. The market expects the economy to have grown at 6.6 per cent in the June quarter after having fallen to 6.1 per cent in the March quarter.
A pick-up in the growth rate may help limit the downside in the rupee. The growth numbers will be followed by the Manufacturing Purchasing Managers’ Index (PMI) data for August on Friday.
The PMI (47.9) had fallen sharply into the contraction phase in July, the lowest since 2009. It will be significant to see whether manufacturing activity has improved.
Rupee outlookThe rupee has a key immediate resistance at 63.80. If it manages to breach this hurdle, the currency can move higher to 63.60 in the coming days. Further break above 63.60 will see the rupee strengthening to 63.40.
On the other hand, if the rupee reverses lower again from 63.80 in the coming days, it can revisit 64 and 64.10 levels. A strong break below 64.10 will increase the downside pressure and can drag the currency lower to 64.35 or even 64.50 levels thereafter.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.