Indian Rupee trades over 68-mark against dollar; RBI may save the free fall

Indian Rupee is trading very buoyant against US benchmark dollar index at interbank forex market. The domestic currency have been hovering over 68-mark against dollar for fourth consecutive day today. However, in early morning, the rupee recovered to 1-month low as it was trading at around 68.06 higher by 32 paise higher against US dollar. According to Kotak Institutional Equities, year till date, INR has been a slightly below median performer in the emerging market basket. For the ongoing quarter, Rupee is an median performer in the EM basket. Interestingly, few minutes after cooling off, the rupee once again entered into free fall versus dollar. 

At around 1227 hours, the Indian rupee was trading at 68.061 down by 0.025 points or 0.04% against US dollar. 

As per Anindya Banerjee, analysts at Kotak, after yesterday’s sharp upswing in Dollar Rupee towards 68.40 levels on spot, there has been a sharp cool-off today morning with NDF dragging down the pair towards 68.04 on spot reference. It could be due to late recovery in the US stock market and with calm prevailing across Asian. Asian currencies are trading mixed and major too are not doing much against US Dollar. Brent is hovering between 75-76 a barrel ahead of the OPEC meeting, this weekend. 

The Reserve Bank yesterday announced purchase of government securities of up to Rs 10,000 crore on June 21 to help in liquidity management. Banerjee adds, "It is not only a near term sentiment booster for the GOIsec market but also may have helped cool-off the USDINR."

Over the near term, USDINR will take cue from trend in USD against majors and EM currencies. 

In previous trading session, the rupee finished at 68.055 down by 0.02% against dollar. Meanwhile, the foreign investors continued to remove their money, as they recorded an outflow of Rs 1153 crore cumulatively in equity, hybrid and debt market, as per NSDL data. 

Banerjee says, " Thanks to heavy intervention from the central bank, inspite of USD 8 billion outflows from local bond and equity market, Rupee has moved in line with median performance of its peers against US Dollar. Going forward, we expect RBI to maintain the current objective of its intervention, trying to keep the local unit in line with its EM peers, a smart strategy."

"Intermediate trend remains upward as long as 67.60 is intact on spot. Buy on dips remains the trade as support is between 68.00/68.10 levels on spot and resistance around 68.50/55 and then closer to 68.90 levels on spot Stops need to be place below 67.60 levels on spot," adds Banerjee. 

The benchmark Sensex indices today was trading at 35,480.34, above 193.60 points or 0.55%, while Nifty 50 rose by 49.15 points or 0.46% trading at 10,759.60.