The trading range in USDINR spot has shifted to 72.00-73.00 and RBI seem to be comfortable with rupee appreciating below 73 levels. This week is a holiday-thinned market so forex trading may be uninspiring but RBI intervention will be eyed. Also, the focus will remain on global flash PMIs and Fed minutes. The FOMC will release the minutes to the January meeting, in the recent speech at the Economic Club of New York, Powell was dovish and repeated that the Fed would not consider raising interest rates even if inflation exceeds 2% on a temporary basis. After hearing Powell, the focus is on minutes so that it might only provide limited insights into whether policymakers are encouraged and what it means for monetary policy.
Technically, as seen in the following chart, USDINR spot opened the week at 72.61 compared to the previous close of 72.75. The crucial strong support is located at 72.55/72.50 and consistent trading below 72.50 only we can see a dip towards 72.30/72.25. However, if it respected 72.55/72.50 then only a reversal is foreseen to find crucial resistance at 72.80-73.0 and then 73.25.
So until the USDINR spot is trading below the psychological level of 73, we recommend that exporters must hedge their short term receivables on a systematic basis for higher export realisations. Not hedging the export receivables will prove ineffective from the hedging perspective.