Rupee Bounces Back From Key Support Level
The Indian rupee snapped its six-year losing streak in 2017 and posted gains of over five percent against the U.S. dollar. But it failed to keep the momentum going this year and lost nearly 2 percent till Feb. 9. against the greenback.
However last week, the rupee was able to find some lost ground by bouncing back after taking support at the key 200-day moving average. A simple moving average is formed by computing the average price of a security over a specific number of periods.
In the last one year, the domestic currency has taken support at the 200 DMA thrice, and each time appreciated more than two percent. The rupee is now trading 0.5 percent lower than last year’s close.
This can be attributed to the global weakness in the dollar. The dollar index posted its worst year in 2017 since 2003 by declining nearly 10 percent. The current year has been no different. The gauge measuring six major currencies against the dollar has seen a cut of 4 percent so far this year.
All 10 currencies in the G10 basket have appreciated against the dollar in 2018. The euro has gained more than four percent and has the highest weightage in the dollar index (about 58 percent).