Currency market update: Rupee records biggest single-day fall in ten months

The rupee suffered the most in a single day in the previous 10 months due to geopolitical worries. Continue reading to learn more.

On February 24, 2022, the spot USD/INR pair increased by 1.5 per cent (109 paise) to 75.65. Since April 7, 2021, this is the largest one-day rise. This occurred in the context of shaky attitudes, increasing crude oil prices, and dollar demand from oil importers. Russian armies entered the Ukraine area, escalating the war.

As a result, Brent crude oil prices have risen past USD 100 per barrel. This is not healthy for the Indian economy since it might lead to higher inflation and weaker current account and fiscal balances. This might drive the Reserve Bank of India (RBI) to tighten monetary policy even more.

Technically, the USD/INR pair found support around its 200 Day Exponential Moving Average (EMA) of 74.44 and returned to its monthly high of 75.18. The resistance levels for the pair are 75.43 to 75.74. Historically, this pair has reversed four times from this level in the last one year.

The USD/INR pair's march futures developed a Bullish Marubozu candlestick pattern, indicating a favourable trend. It is seeing a rising resistance trendline around 76.25 levels, with support located at 75.70 levels.

In terms of indicators, the 14-day Relative Strength Index (RSI) is over 50 and rising, signifying bullish momentum. Moving Average Convergence Divergence (MACD) on the other hand has been trading above the zero line and is flattening, suggesting consolidations.

New longs have been seen as price, volume, and open interest have increased. The USD/INR march ahead is expected to rise, but keep an eye out for support and resistance levels around 75.60 and 76.15, respectively.