Currency market update: Commodity price rise to keep rupee under stress

Yesterday, the Indian Rupee began near the March 22, 2022 close of 76.43 and is expected to stay under pressure due to increasing commodity prices. Continue reading to learn more.

The Indian rupee began weaker on Thursday, amidst risk-averse attitudes and a rise in crude oil prices overnight. The USD/INR pair rose for the third day in a row on Wednesday, closing at 76.43, up 50 paise or 0.66 per cent from the previous level.

In comparison to its developed market counterparts, the US dollar was neutral, while the yen fell for the fourth day in a row, reaching a six-year low. The pound fell when Chancellor Rishi Sunak proposed a tax cut and reports suggested higher-than-expected inflation. With global concerns and the US Fed's hawkish tone, the dollar index (basket of six currencies) is expected to trade around 99.

According to sources, the US crude oil stockpiles have fallen, and the storm's damage to the critical Black Sea has heightened the supply risk. Furthermore, as the United States prepares to impose further sanctions on Russia, West Texas Intermediate (WTI) crude oil soared to USD 116 per barrel.

The USD/INR pair's March futures are seeing buying at the psychological threshold of 76. The pair has found short-term support on its 21-Day Moving Average (DMA), as well as medium-term support on its 50-Day Exponential Moving Average (EMA).

Furthermore, it has maintained its bullish tone since the lows in January 2022, making a succession of higher highs and higher lows. In terms of indicators, the Relative Strength Index is now trading at the 50 level, indicating short-term consolidation.

In terms of key levels, the pair's near-term support and resistance levels are 75.54 to 75.82 and 76.33 to 76.46, respectively.