USDINR is range bound and appears to be breaking out of the upside resistance of the wedge. Last three consecutive sessions have seen doji candlestick pattern clearly indicating indecision after the long rally. 60.80 is also the 78.60% fibonacci retracement of the upmove from 58.64 to 68.80.
A clear break below 60.80 is needed for INR bullish momentum to sustain.
Till such time, one can look to buy on dips for an immediate target of 62.50 with stop below 60.80.
A couple of other thoughts to share
- one of the exporter companies' CFO mentioned that at 68 levels on the usdinr his order book saw a jump in new orders and exports became cheaper compared to even the chinese. So my sense is that authorities are going to limit sharp rupee appreciation as that disrupts the natural macro adjustment.
- buying on account of accumulation of forex reserves by RBI (as can be seen in a sharp jump of USD 3.395 bn in forex reserves to USD 281.12bn mainly on account of foreign currency assets). Although, part of this increase in reserve assets is on account of revaluation gains.
- Withdrawing oil swap window
However, if the decision to divest Hindustan zinc and Balco go through, the stake sale is likely to fetch the government USD 3.5 bn which could be rupee positive.
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