BL Research Bureau:
The currency market was nervous ahead of the Reserve Bank of India and the Federal Reserve's policy meetings. The rupee reversed from the 61 mark to move lower over the past week. Despite the RBI maintaining a status quo on policy rate, the rupee lost ground against the dollar to end at 62.1 on Tuesday.
The FOMC's decision on tapering its quantitative easing programme is likely to be the key determinant of the rupee's movement in the weeks ahead.
Inflation based on the wholesale price index (WPI) and the consumer price index (CPI) surging to 7.52 per cent and 11.24 per cent, respectively, had led the market to believe that a rate hike by RBI was imminent. But the apex bank has decided to give food inflation some more time to cool down. It has however cautioned that policy action can be taken anytime, between policy meetings too, if inflation data is not conducive.
The rupee is receiving some support from foreign institutional investors (FIIs). Both the debt and equity segment attracted inflows in the past week which helped limit the weakness in rupee. FIIs bought $139.1 million in debt and $442 million in equity in the past week.
DOLLAR-INDEX
The dollar-index is managing to sustain above its support at 79.7. Series of important supports are coming up for the index at 79.7, 79.4 and at 79. The outcome of the US Federal Reserve meeting will decide whether these supports will hold. Strong decline below 79 will be bearish for the index with the next target at 76. Conversely a rally from here can take the index higher to 82.
DOLLAR-RUPEE OUTLOOK
Though the rupee failed to breach 61 in the past week, the short-term outlook remains positive as long as it trades above 62.6. A reversal from 62.6 will be an initial signal for the confirmation of the complex 'head and shoulder' reversal pattern on the daily and weekly charts.
While above 62.6, the probability will be high for it to breach 61. The targets on a breach of 61 will be 60 and 59. The strength in rupee could be limited to 59, a key medium-term resistance. Reversal from 59 can see the currency declining lower again over the medium-term.
However, if the rupee declines below 62.6 now, it can fall to 63 and then 64 again. This will put the currency in a sideways range between 61 and 64. Having said this, 62.6 will be a critical level to watch now.
(This article was published on December 18, 2013)
via Business - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNGa7rMns_GSoGnfgldKdRxZuY1B6Q&url=http://www.thehindubusinessline.com/industry-and-economy/banking/rupee-nears-key-support/article5474996.ece?ref=wl_industry-and-economy
Put the internet to work for you.
0 comments:
Post a Comment