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Rupee Turns Best Performer from Worst Performer among Asian Basket

For Rupee December turned out to be a roller coaster as in the first fortnight it was worst performer, but in second half of the month it reversed and becomes the best performing currency among Asian basket. Expectation of better dollar inflows, steady dollar index and crude oil price , dollar selling by local banks on behalf of exporters and many more supported rupee in coming back to three month high.

Spot USDINR expected open on flat note following region currencies. However, gain in crude oil prices and risk-averse sentiment could support the pair to limit the loss. Today being last trading day of the week, month and year, we expect lackluster movement.

On Thursday, spot USDINR ended with loss of 32 paise or 0.4% to 74.42. Technically, the pair has broken the upward slopping trend line support at 74.50 which leads to further weakness and we could see level of 74 odd levels while 74.70 becomes near term resistance.

Asian stocks may get a boost on the last trading day of the year, with futures pointing higher for Hong Kong and steady for Australia. Japan and a number of other markets are shut. Early today, China’s official manufacturing and service PMI for December month came better than expected. Dollar index has been trading flat against major trading currencies.

Presidents Joe Biden and Vladimir Putin held a 50-minute call, a prelude to three sets of negotiations on European security next month. The White House said Biden urged Putin to de-escalate tensions with Ukraine, and warned that the U.S. and its allies would “respond decisively” if Russia invades

Technical Observations:

USDINR January futures broken the rising trend line support of 74.85 and headed towards next support of 74.54, the horizontal trend line support.

The pair has been trading near three month lows. Falling below 74.50 will confirm the lower bottom on medium term basis.

Momentum oscillator, Relative Strength Index of 14 days period further weaken and last placed below 30, considered as oversold zone.

Derivative data indicating fresh short position amid fall in price and increase in Open interest and volume.

USDINR January futures expected to trade with negative bias and we could see level of 74.30 on break of 74.50 while on higher side 74.90 becomes the resistance.

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