Rupee - Dec 28, 2020 - Reliance Securities

Mr. Sriram Iyer, Senior Research Analyst at Reliance Securities

The Indian rupee was trading marginally lower against the U.S. currency as importers covered their immediate payables, which overshadowed a broadly weaker dollar.

The rupee was quoting at 73.58 to the dollar compared with 73.54 in the previous session. The local currency had opened a tad higher, but there was hardly any follow-through with the rupee not being able to go above 73.50.

"The volumes are quite low and the price action is quite lethargic. There is a bit of dollar demand from banks who are known to have importer flows and there are exporter orders at higher levels on the flow". "We expect this kind of range-bound trading most of this week. We reckon there will be a bit of action tomorrow when the December USD/INR futures contract expires."

The USD/INR December contract traded on the NSE and BSE expires at noon tomorrow. The high open interest on the contract amid regular intervention by the Reserve Bank of India could prompt volatility on spot OTC near to the daily fixing.

The rupee's range-bound moves came despite the broad dollar decline amid firm risk appetite. Asian shares and US futures were trading higher and the dollar index dropped below 91.20 after US President Donald Trump signed a coronavirus relief package. The passage of the bill had been impeded last week after Trump called for more direct payments to individuals.

Trump signing the bill was a boost for equities, which earlier last week came under a bit of pressure on account of a new virus strain. The BSE Sensex is back at record highs after having tumbled almost 3% last Tuesday.

Technically, USDINR Spot is holding near its multiple support zone of 73.40-73.50 levels where it is expected to trade on flat note on dried volumes. However, it is trading below 21 as well as 50 Daily Moving Averages indicating for a negative trend to continue below 73.75 levels.

USDINR could trade in a range of 73.35-73.70 levels in coming session.

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Source : Equity Bulls

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