Indian rupee to get support at 85.5, in case of breach it may test 86.5 against US dollar: UBI - World News Network

New Delhi [India], January 7 (ANI): The Indian rupee opened strong on Tuesday morning as compared to the all-time low it tasted during the previous session. At the time of filing this report, the rupee traded at 85.75 against the US dollar, vis-a-vis an all-time low of 85.84.
Union Bank of India in a report asserted that, based on the current global scenario, the rupee should technically take support at 85.50 followed by 85.10 levels and may find resistance around 85.90, and any breach of which will test 86.50 levels.
The Indian rupee has been under pressure against the US dollar post Trump’s win but the impact on the rupee is less as compared to other major currencies.
The US Dollar Index gained more than 2.5 per cent in December’24 and closed the third consecutive month in positive territory.
The rupee slipped by around 3 per cent in entire 2024. The concerns over the HMPV (human metapneumovirus) virus also weighed on the rupee on Monday.
“Dollar has maintained an upward bias on US exceptionalism and uncertainty over Trump’s policies,” said the report. “This in turn has strengthened the Dollar and all the major global currencies took a hit.”
The US dollar being the reserve currency of almost all countries is detrimental to other currencies, especially in times of sharp volatility in financial markets as it weakens peer currencies.
Already, the rupee’s sentiment was weak after the dismal trade data for November, and frail Balance of Payment dynamics, among others.
Against this backdrop, the RBI has been intermittently intervening in the forex market to check the rupee’s depreciation.
The RBI often intervenes by managing liquidity, including selling dollars, to prevent steep Rupee depreciation. The forex reserves had been falling ever since it touched an all-time high of USD 704.89 billion in September. Effectively, they are now about 10 per cent lower from the peak at USD 640.279 billion.
“Since June’24, unlike Asian peers, Rupee was the worst performing currency and was hovering close to its then all-time lows. However, in Nov’24, when most of the major global-market currencies depreciated against Dollar, Rupee has relatively been less affected among the Asian peers and depreciated marginally until US elections outcome,” the report said.
But, in December 2024, the rupee sell-off gained momentum which was mostly due to the change in Governorship in the RBI, with hopes for rate cut rising in the upcoming monetary policy meeting. (ANI)

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