Currency market update: Rupee inching towards worst quarterly loss in two years

The rupee climbed for the fifth day in a row due to a weak dollar index, bullish market confidence, and lower crude oil prices. However, it is on track to post its worst quarterly loss in two years.

In line with other Asian currencies, the Indian rupee began higher on Thursday and gained more as the day went on. Following a massive sell-off this quarter, foreign institutions have become net purchasers in the last few days. In the spot market, the USD/INR pair opened around 75.63.

The rupee climbed for the fifth day in a row as a result of a weaker dollar index, bullish market confidence, and lower crude oil prices. The Central Bank's announcement of a five-billion-dollar sell-and-buy swap added fire to the INR rise. On Wednesday, the spot USD/INR pair slipped 17 paise, or 0.22 per cent, to 75.63.

The technical setup has shifted negative, with the USD/INR pair ending at 75.63. In the short term, it has a support level of 75.4 and a resistance level of 75.8.

The US dollar fell the most versus its group of ten peers as Treasury rates fell. The 10-year benchmark bond yield in the United States fell by about five basis points to settle at 2.35 per cent. The Euro rose as a result of surprisingly strong inflation in Spain and Germany.

The USD/INR pair's April futures fell for the sixth day in a row. However, after four bearish candlestick patterns, a bullish candlestick pattern appeared, signalling that short covering was in play ahead of the fiscal year-end.

The pair is trading below both its short-term and medium-term moving averages, indicating a potential weakening soon. In terms of indicators, the Relative Strength Index (RSI) has fallen below 50 and is continuing to fall, indicating weakening momentum.

With a bearish bias, the USD/INR pair is projected to move between 76.3 and 75.8. If it goes below 75.4, it may continue to slide towards 74.99, which is also the 61.8 per cent Fibonacci retracement level.