Rupee seen trading at 46.40-47.20 against the dollar

The rupee lost 1.40% last week as markets reacted to a string of poor US data, belying hopes of an early US recovery. The rupee seems set for more losses. The range could be between 46.40 and 47.20.

Support is seen over the 46.40-50 range and initial resistance under 47.00. Indian markets will focus on the dollar’s global positioning against the majors and Asian peers. RBI’s rate hike is expected to see some rise in forward premia.
Its impact on the rupee may not be significant.

FII reactions will be looked at for clues. An equity sell-off at this stage could put further pressure on the rupee. A larger fall of the dollar, however, in the global markets could act to negate the “build-up” of the negative factors against the rupee. The dollar could have undertaken a greater part of its corrective dip last week with most factors accounted for.

Could the markets now again start focusing on the euro zone debt related banking issues?

(By Satyajit Kanjilal CEO — Forexserve Risk Management Consultants)