In my earlier report, I had mentioned that rupee is forming a triangular pattern and the range of the pair is getting compressed as it is constantly making lower highs and higher lows pattern. This calm momentum of rupee was strongly signalling a breakout in the narrow range of 71.10-71.45 with a target of 71.80 levels.
Fundamentally, despite many adverse factors in the overseas markets, the rupee showed no significant negative impact until last week. However, things changed when the spread of the coronavirus beyond mainland China into some Asian countries has significantly weakened the Asian currencies against the dollar. The rupee is not insulated from the infectious effect and the domestic currency might give further surprises.
Now that the target of 71.80 is achieved on Thursday, what’s next on the cards? Let us analyse below-mentioned factors to understand what the reasons for depreciation are and what can prevent further losses in the pair.
Reasons why rupee can depreciate towards 72.20-30 levels:
Reasons for rupee to not depreciate beyond 72.40 mark before March 20:
Therefore, based on the above-mentioned factors, there is a 70-80 percent probability that the pair shall not depreciate beyond 72.40 levels until March 2020 and the further course shall be determined based on the upcoming data and news. Therefore, any rise above 72.00 levels remains a selling zone and dips near 71.10-71.20 remains a buying zone for the next one month.
Amit Pabari is the MD of CR Forex Advisors.
First Published: Feb 24, 2020 6:14 PM IST
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