Indian rupee set for a directional breakout against US dollar: Analysts

“The longer the narrow range prevails … the higher is the risk of a big eventual break,” said Anindya Banerjee, head research – fx and interest rates at Kotak Securities, told Reuters. In September-October last year, the rupee fell from 80.00 to 83.29 in just a month after being held in the 79.50-80.00 range.

The rupee today traded at 82.80, pulling back from close yesterday’s close of nearly 83. 

“The USDINR pair after multiple attempts failed to move above the 83.00 handle, and was broadly consolidating between 82.50 and 83.00. The way the pair reacts around the 83.00 zone will be crucial to watch. As of now technically we can expect the 83.00 level to act as a resistance and on the down side we might see 82.50 act as a support,” Anindya Banerjee said. 

The realized volatility on USD/INR has fallen to below 2%, the lowest since June 2022.

Overall, the longer the pair remains in a narrow range, the sharper would be the breakout and the chances of a breakout below 82.50 are higher than above 83.00-83.20 levels, given by otherwise stable peer currencies and domestic fundamentals, said CR Forex Advisors in a note.

“The rupee has remained constantly near the upper band of the broad range of 81.50-83.00 levels since mid-December despite the stronger domestic economy. Apparently amid heavy dollar buying by the PSUs, oil companies, and major corporates. On the other end, relatively fewer orders with exporters due to the global slowdown coupled with lower forward premiums are discouraging the exporters to sell. However, as witnessed earlier, RBI seems to have held its reins tight around 83.00 levels and would take an opportunity to use its reserves if there is any erratic move seen in the USDINR pair,” CR Forex Advisors said.  

Anand James – Chief Market Strategist at Geojit Financial Services, said that a pullback below 82.84 could again render the trend sideways within the consolidation band of 82.75-82.59. (With Agency Inputs)