- The Indian rupee triggers 0.75% to about 86.10 against the US dollar while the price of oil collapses after the truce between Israel and Iran.
- A significant improvement in the appetite of investors risk has hit the US dollar hard.
- The governor of the Fed, Bowman, argued in favor of reducing interest rates in the July monetary policy meeting.
The Indian rupee (INR) opens strongly 86.10 against the US dollar (USD) on Tuesday. The USD/INR torque collapses while the price of oil continues the fall after the announcement of the high fire between Israel and Iran by the president of the United States (USA), Donald Trump, through a publication in Truth.social, which has strengthened the Indian currency.
The price of oil in the New York Mercantile Stock Exchange (NYMEX) has collapsed more than 15% since its maximum of $ 76.74. This scenario is favorable for nations coins that have lower oil reserves and depend significantly on imports to meet their needs, such as Indian rupee.
Inflation in the Indian economy cools, and the current account deficit decreases if oil prices remain low.
It has been fully agreed between Israel and Iran that there will be a high and total fire (in approximately 6 hours from now on, when Israel and Iran have reduced and completed their ongoing final missions), for 12 hours, at which time the war will be considered, finished, “Trump wrote.
After the announcement of the Alto El Fuego between Israel and Iran by President Trump, a senior Iranian official has also confirmed that Tehran accepted the high the mediated fire for Qatar, proposed by the US with Israel, Reuters reported.
The lowest oil prices and a strong increase in the appetite of investors risk, after the announcement of the high fire between Iran and Israel, have fed a strong recovery in the Indian stock market, sending the NIFTY50 208 points higher by opening about 25,180. Meanwhile, the Sensex30 has risen 0.85% to about 82,600. Both indices saw a strong mass sale in the opening session on Monday after Iran threatened to close the Ormuz Strait, which supplies almost a quarter of global oil. However, they recovered rapidly due to strength in the domestic economy. On Monday, foreign institutional investors (FIIS) bought Indian shares worth 5,591.77 million rupees.
What moves the market today: Indian rupee is strengthened against the US dollar as the demand for shelter assets falls
- The strong downward movement in the USD/INR torque is also driven by the weakness of the US dollar due to multiple winds against: improvement of the risk profile and a change in the position of federal reserve officials (FED) on monetary policy perspectives.
- A strong increase in the appetite of investors risk, after the truce between Israel and Iran, has decreased the attractiveness of the US dollar, which won strongly on Monday. The US dollar index (DXY), which tracks the value of the dollar against six main currencies, falls to about 98.10 during the Asian negotiation hours on Tuesday from a new maximum of two weeks around 99.40 recorded the previous day.
- In the domestic sphere, the recent comments of some FED officials have pointed out growing concerns about the labor market and a growing confidence that the impact of tariffs imposed by President Donald Trump on inflation will be limited. A scenario that reinforces the hopes of a short -term interest rates cut.
- On Monday, the governor of the Fed, Michelle Bowman, showed openness to reduce interest rates at the July meeting, citing downward risks for employment and confidence that commercial policy will only have ‘minimum impacts’ on inflation. “It’s time to consider adjusting the policy rate,” Bowman said and added, “we should give more weight to downward risks for the labor market in the future.”
- Last week, the governor of the Fed, Christopher Waller, also argued in favor of cutting interest rates in July, citing concerns about the labor market. “The Fed should not wait for the collapse labor market to cut rates,” Waller said.
Technical Analysis: USD/INR collapses near the 20 -day EMA
The USD/INR torque collapsed when opening near the exponential mobile (EMA) average of 20 days around 86.10, suggesting that the short -term trend has become uncertain.
The 14 -day relative force index (RSI) falls vertically to about 50.00 after remaining above 60.00 in the last days of negotiation, indicating a strong bassist reversal.
Looking down, the maximum of June 12 at 85.70 will act as a key support for the pair. On the positive side, the maximum of June 19, 86.93 will be a critical obstacle to the pair.
India Faqs Rupia
Indian rupee (INR) is one of the most sensitive currencies to external factors. The price of crude oil (the country depends largely on imported oil), the value of the US dollar (most of the trade is carried out in US dollars) and the level of foreign investment are all influential factors. The direct intervention of the Bank of the Reserve of India (RBI) in the currency markets to keep the exchange rate stable, as well as the level of the interest rates set by the RBI, are other important factors that influence the rupee.
The Bank of the Reserve of India (RBI) actively intervenes in the currency markets to maintain a stable exchange rate and help facilitate trade. In addition, the RBI tries to maintain the inflation rate in its 4% target adjusting interest rates. Higher interest rates often strengthen rupee. This is due to the role of the “Carry Trade”, in which investors borrow in countries with lower interest rates to place their money in countries that offer relatively higher interest rates and benefit from difference.
Macroeconomic factors that influence the value of rupee include inflation, interest rates, economic growth rate (GDP), trade balance and foreign investment tickets. A higher growth rate can lead to greater investment abroad, increasing the demand for rupee. A less negative trade balance will eventually lead to a stronger rupee. The highest interest rates, especially real types (less inflation interest rates) are also positive for rupee. A risk environment can generate higher direct and indirect foreign investment entries (FI and FII), which also benefit the rupee.
Higher inflation, particularly if it is comparatively higher than other countries, is generally negative for the currency, since it reflects a devaluation through excess supply. Inflation also increases the cost of exports, which leads to more rupees to buy foreign imports, which is negative for Indian rupee. At the same time, higher inflation usually leads to the Bank of the Reserve of India (RBI) to raise interest rates and this can be positive for rupee, due to the increase in demand for international investors. The opposite effect applies to lower inflation.
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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.
