The Indian rupee rose for a second consecutive session on Wednesday, boosted by large dollar sales by exporters, but gains were capped by caution ahead of the U.S. Federal Reserve’s policy meeting this week and as shares fell to 2-1/2 week lows.
The currency fell 0.7 percent in April after having hit an eight-month high of 59.5950 on April 2, as a rally in domestic shares stalled as India embarked on a five-week election process set to conclude next month. The monthly fall snapped a 4.6 percent rally over February and March sparked by heavy foreign buying of shares on the back of an improving domestic economy and hopes that opposition Bharatiya Janata Party (BJP) would sweep elections Until the outcome of elections on May 16, traders expect global factors and foreign flows to largely drive direction for the rupee. The partially convertible rupee closed at 60.31/32 per dollar for the month compared to previous month close of 59.87/88 per dollar.
USDINR in spot traded consolidated from September 2013 to mid of March 2014 between 62.80-61 range. It broke its long time support at 60.91 levels and now has continued to trade below that level for month of April trading range bound. We expect rupee to strengthen further to 59.50-59.10 level. If rupee breaches 61 level than we would negate our bearish view.
Currency Research Desk
Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.