Rupee likely to trade in a band of 50.80-51.80

By Ashtosh Raina (Head-Forex Trading, HDFC Bank)

The area of 51.4000-51.4500 offers a very strong resistance in USD/INR currency pair and we need a daily close above these levels for a fresh up-move towards 51.8500 level (first target level) and 52.2200 (all-time high). Till then the broad expected range should be 50.8000-51.8000, with support levels at 51.1500/50.8500 and a very strong next support level at 50.5500.

We are still in a bullish trend in the USD/INR currency pair, but with suspected intervention from the Central Bank a couple of times last week, it is bound to become choppier as we move ahead. The FDI and FII inflows have dried up substantially.

The rising oil and commodity prices, widening current account deficit, fiscal slippages, difficulties in raising fresh ECBs and rollover of short-term credit in foreign currency are also putting pressure on the USD/INR pair. The Sensex also looks weak and set to retest the 15000 levels, which may add to the weak INR sentiment.

Globally, risk-off trend continues and a quickfix to the Eurozone crisis looks far from being in sight.

With growth concerns in both US and Eurozone, coupled with sovereign debt crisis and the widening bond spreads in Euro zone, global markets these days have become extremely volatile and headline-driven.