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Rupee Plunges to Record low on Risk Averse mood - HDFC Securities 

Indian rupee plunged to a record low following risk averse mood along with sharp surge in crude oil and gold prices. Panic selling has been seen rupee after concern has mounted following suggestions that Russian oil may be sanctioned, and that Russian gas supplies to Europe could be halted. Frontmonth Brent crude is at about $123/bbl, having briefly looked at $140/bbl yesterday. Gold is knocking on $2000/oz.

On Monday, spot USDINR closed at record high of 76.97 with gains of 80 paise or 1.05%. The pair has been highly overbought daily chart amid parabolic up move in last couple of days. It has psychological resistance at 77 from where we could see pull back before heading higher. Near term support has been seen around 76.30, the run away gap of Monday.

A measure of greenback strength is as its highest level since July 2020 as surging commodity prices on possible Russia energy sanctions boost stagflation fears.

Most Asian stocks fell Tuesday as traders evaluated concerns that elevated commodity costs will fan inflation and choke economic expansion. The turmoil on global financial markets intensified Monday, with U.S. stocks plunging the most in 17 months and commodity prices relentlessly powering higher. The S&P 500 sank almost 3% for its worst day since October 2020.

Elsewhere, Gold reclaimed the $2,000 per ounce mark for the first time since summer 2020, while WTI crude reached $120 a barrel, up 36% from the end of January. Biggest surprised were seen from Nickel which gained 80% in a day following short squeeze

USDINR

Technical Observations:

USDINR March futures opened with and closed near day’s high. Parabolic up move has been seen in last couple of days.

The pair has been trading well above short term moving averages.

Relative Strength Index of 14 days period placed at 76 and heading north indicating continuation of bullish momentum

Derivative price actions indicated continuation of long build up with rise in price, open interest and volumes.

USDINR March futures likely to see consolidation before heading towards 78 as it has been overbought on hourly chart. Near term bias remains bullish and crossing of 77.50 will open higher side for 78 whiled on down side 76.40 becomes support.

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