- Indian rupe loses land in the European session on Friday.
- The increasing geopolitical tensions after the Kashmir attack could undermine the INR.
- Positive developments in commercial negotiations and the continuous entry of foreign capital could limit the loss of the torque.
The Indian rupee (INR) weakens on Friday, pressured by the renewed demand of the US dollar (USD). The increased geopolitical tensions after a terrorist attack in Pahalgam, Jammu and Kashmir also drag the indian currency down.
However, optimism around commercial conversations between the US and India could provide some support to the Indian currency. Currently, the 26% reciprocal tariff on India imposed by the US is in a 90 -day pause. The suspension will expire on July 8. India faces a 10% tariff as other nations according to the US trade policy. Investors will be attentive to the final reading of the Michigan consumer of the US Michigan later on Friday.
Indian rupee operates weaker amid the growing tensions between India and Pakistan
- According to the Reuters survey, the India Reserve Bank is expected to reduce the rest rate at 5.50% by the end of the third quarter (compared to 5.75% in the March survey).
- India’s economy is expected to grow 6.3% in 2025-26 and 6.5% in 2026-27 (compared to 6.5% and 6.5% in the March survey), according to the Reuters survey.
- When asking how US tariffs have affected business feeling in India, 60% of economists, 21 of 35, said the impact was negative or very negative. Meanwhile, 14 economists said it was neutral.
- Pakistan has announced a series of diplomatic reprisal movements against India and has demanded evidence that supports the affirmations of the Indian government that Islamabad was involved in the attack in Kashmir.
- The US Treasury Secretary, Scott Besent, has suggested that India is likely to become the first country to finish a bilateral commercial agreement with the US to avoid Trump’s reciprocal tariffs on Indian exports.
- The president of the Fed of Minneapolis, Neel Kashkari, said Thursday night that, with uncertainty, companies with dismissals.
The bassist perspective of the USD/INR is maintained
Indian rupee operates weaker in the day. However, the bearish tone of USD/INR It prevails since the pair is below the exponential (EMA) mobile average of 100 days in the daily temporal framework. The 14 -day relative force (RSI) index is below the midline about 38.35, suggesting that a greater fall seems favorable.
The first downward objective to be observed is 84.85, the lower limit of the descending trend channel. A sustained trade below this level could open the door to a movement around 84.22, the minimum of November 25, 2024. The next containment level is observed in 84.08, the minimum of November 6, 2024.
On the positive side, the 100 -day EMA at 85.82 acts as an immediate level of resistance for the USD/INR. A decisive rupture above the mentioned level could see an increase towards 86.45, the upper limit of the trend channel.
FAQS risk feeling
In the world of financial jargon, the two terms “appetite for risk (Risk-on)” and “risk aversion (risk-off)” refers to the level of risk that investors are willing to support during the reference period. In a “Risk-on” market, investors are optimistic about the future and are more willing to buy risk assets. In a “Risk-Off” market, investors begin to “go to the safe” because they are concerned about the future and, therefore, buy less risky assets that are more certain of providing profitability, even if it is relatively modest.
Normally, during periods of “appetite for risk”, stock markets rise, and most raw materials – except gold – are also revalued, since they benefit from positive growth prospects. The currencies of countries that are large exporters of raw materials are strengthened due to the increase in demand, and cryptocurrencies rise. In a market of “risk aversion”, the bonds go up -especially the main bonds of the state -, the gold shines and the refuge currencies such as the Japanese yen, the Swiss Franco and the US dollar benefit.
The Australian dollar (Aud), the Canadian dollar (CAD), the New Zealand dollar (NZD) and the minor currencies, such as the ruble (Rub) and the South African Rand (Tsar), tend to rise in the markets in which there is “appetite for risk.” This is because the economies of these currencies depend largely on exports of raw materials for their growth, and these tend to rise in price during periods of “appetite for risk.” This is because investors foresee a greater demand for raw materials in the future due to the increase in economic activity.
The main currencies that tend to rise during the periods of “risk aversion” are the US dollar (USD), the Japanese yen (JPY) and the Swiss Franco (CHF). The dollar, because it is the world reserve currency and because in times of crisis investors buy American public debt, which is considered safe because it is unlikely that the world’s largest economy between in suspension of payments. The Yen, for the increase in the demand for Japanese state bonds, since a great proportion is in the hands of national investors who probably do not get rid of them, not even in a crisis. The Swiss Franco, because the strict Swiss bank legislation offers investors greater protection of capital.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
