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Rupee expected to open higher as dollar index hover near four week low - HDFC Securities

Indian rupee expected to open higher in line with stronger Asian currencies and dollar inflows in domestic equities. As per the provisional figures, foreign investors have bought worth Rs.980cr equities. Asian currencies traded higher after China’s recorded strongest growth since at least 1992 to 18.3% in the first quarter from a year earlier.

On Thursday, spot USDINR closed at 74.93 from Monday’s 75.06 level, broken the five day wining streak. Probable central bank’s intervention and exporters’ selling dollar dragged pair lower in second half of Thursday’s trade.

The one month forward USDINR last quoted at 75.19 down 24 paise from yesterday’s 5pm level indicating weaker opening at domestic bourses. USDINR is expected to trade lower in today’s trade with downside support at 74.70 and resistance at 75.25.

India's trade deficit in goods widened to $13.93 billion in March from $9.98 billion during the same period a year earlier. Merchandise exports rose 60.29% in March from a year earlier to $34.45 billion, while imports were up 53.74% to $48.38 billion, on back of a low base effect in the lockdown last year same time. Going ahead challenges remain following surge in virus cases and rise in energy imports.

Asian stocks look poised to gain after surprisingly robust US economic data helped propel U.S. benchmark indexes to records while yields on benchmark US 10-year Treasury notes declined. Retail sales, jobless claims and regional Fed survey data all suggest the U.S. economy is firing on all cylinders. The 10- and 30-year yield quoting around 1.56% and 2.25%, respectively, each at its lowest in more than a month. Expect the dollar to remain under pressure as Treasury market risks are skewed toward further 10-year yield declines after they closed below support in the 1.58%-1.60% area.

USDINR

USDINR April futures formed candle with small body and longer shadow suggesting long unwinding at higher level.

The pair sustained well above long term moving averages.

The pair has completed the flag pattern target by touching high of 75.50.

Oscillators on hourly chart suggesting profit booking.

We believe USDINR April futures may consolidate around 75 levels before heading higher. It has support at 74.70 and resistance at 75.50.

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