The Rupee (INR), which has been one of the weakest Asian currencies in the past one month, remained stable against the dollar (USD) over the past week and has been gradually appreciating over the past few sessions. The currency market participants seem to be waiting for the announcements from the U.S. Federal Reserve which can increase the volatility in the coming weeks.
The Fed is set to announce its monetary policy on Wednesday. The market expects the Fed to increase the rates by 75 and even 100 basis points. That said, the FPI (Foreign Portfolio Investors) outflows seem to have slowed down significantly in June. The net outflow in July stands at $314 million compared with $6.6 billion in June.
The dollar index (DXY), which witnessed a decline recently, seems to have stabilized. In the past few trading sessions, it has been moving in the range of 106-107.35. Incidentally, the DXY has a trendline support at 106 and the likely of a rally from here looks high. It might appreciate to 109 in the shortterm.
The rupee, after hitting a record low of 80.06 last Thursday, has recovered to the current level of 79.77. Even though there is room for appreciation from here, there is a trendline resistance at around 79.50. If this is breached, it will pave way for a rally towards 79. Though there has been some recovery in the rupee over the past few sessions, the overall trend remains bearish and that means the recovery can be limited.
