Indian Rupee to 11 month high, pull back likely…

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Narendra Modi-led BJP’s decisive victory in the 2014 general elections pushed Indian Rupee to an eleven month high of 58.61 against the dollar. Rupee has been on the back of hopes of higher foreign capital infows as election results showed the formation of a stable government ast the Centre.

USD/INR pair touched its lowest level in the last eleven months and lost around 1.85 percent in the previous week. The pair is in firm grip of bears as it has fallen for the third straight week and is trading well below its support levels

sharp upside in the currency was capped due to estimates of dollar buying by the Reserve Bank of India (RBI) and dollar demand from oil importers. Also, unfavorable retail inflation data and decline in industrial production restricted positive movement in the currency.

The Indian Rupee touched a weekly high of 58.57 and closed at same levels .Trading strategy for the coming week would be to buy on declines at around 58.20 levels keeping a stop loss of 57.90 with a target of 59.00.

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