Rupee drops further

The Indian rupee dropped further on Thursday tracking weak stocks and decline in EURUSD. The USDINR spot was limited below the 52 mark yesterday, currently has breached the resistance in Asia and trading at 52.30 levels. On domestic front, the market is expecting a CRR cut by the RBI in its next meeting due on 16th Dec. The RBI Governor Duvvuri Subbarao told that the central bank would take the necessary steps to ease liquidity. Subbarao's comments come as liquidity in the banking system remains stubbornly tight, with the cash deficit overshooting the central bank's guidance of INR600 billion. The comments were seen as an indication of more potential bond buybacks, or even a cash reserve ratio cut, until the cash crunch eases. The Indian rupee seems taking guidance from the global developments. The Indian rupee is expected to weaken further today as fears mounted the euro zone may not be able to announce a concrete plan to tackle its debt crisis at a summit later in the day, pushing most regional equities and the euro lower. European Union leaders looked set to adopt a new system of fiscal discipline, but sentiment worsened after the European Central Bank dashed hopes that it would serve as lender of last resort and as Germany rejected a long-term goal of issuing common euro zone bonds. The MSCI's index of Asia Pacific shares outside Japan was down 1.5% while the Nifty India futures traded in Singapore were 1.2% lower, suggesting a shaky outlook for the local market. If the summit fails, then we may see further pressure on the euro zone in terms of rising borrowing cost and rating cut by agencies. The EURUSD may drop further. Strategy: USDINR Dec: The market is expected to trade sideways today with positive bias. The resistance is seen at 52.67 levels and breach of the same may see the market testing 53 levels. The support is seen at 52.15 levels and holing above the same may keep trend positive for intraday. EURINR Dec: The EURINR Is firm today tracking the USDINR, despite a decline in EURUSD. The pair is expected to trade moves of both USDINR and EURUSD and trading in such a situation would be difficult from intraday perspective. Technically, the market has support at 69.70 levels and any dip towards the same is ideal for buying. The ideal stoploss is below 69.50 JPYINR Dec: Outlook is positive for intraday. The resistance is seen at 67.65 and then 67.93 levels. The support is seen at 67.34 and then 67.20 levels.