Mr. Sriram Iyer, Senior Research Analyst at Reliance Securities
The Indian Rupee appreciated on Friday and had the best week against the dollar in 7 weeks, supported by robust foreign inflows and as news of another potentially effective coronavirus vaccine improved risk appetite.
The Rupee ended at 74.16 to the dollar on Friday, compared with 74.27 close yesterday. For the week, the local unit gained 0.6%.
However, again appreciation bias was capped as the RBI may have stepped in to curtail its move.
The U.S. Dollar Index was flat to marginally higher after U.S. Treasury Secretary Steven Mnuchin told the Federal Reserve to return money earmarked for pandemic lending.
However, the Greenback continued to struggle as speculation is growing that the Federal Reserve may further loosen monetary policy in December, as fiscal stimulus plans remain uncertain.
Upside also remained capped on reports that U.S. Senate Republican leaders have agreed to resume negotiations on another coronavirus stimulus package.
Markets will look to cues from the progress of stimulus talks between Democrats and Republicans over the next 2-3 days.
Back home, India will release its gross domestic product data for July to September on Nov, 30.
The one-year forward premium was at 3.12 rupees against 3.09 in the previous session and 3.06 rupees last week.
Technically, USDINR Spot pair is trading below its 21 as well as 100-DMA which is placed at 74.14 levels indicating downside momentum below 74.20 levels up to 73.95-73.78 levels.
However if sustain above 21-DMA near 71.22 levels will continue sideways to marginal upside momentum up to 74.34-74.55 levels.
USDINR Spot pair is expected to trade in a range of 73.90-74.25 levels.