- The Indian rupe collides about 86.85 when opening against the US dollar, since the increase in crude oil prices has hit the first.
- Iran threatens to close the Ormuz Strait after US attack to Tehran’s nuclear facilities.
- Fed Christopher Waller’s member supports the reduction of interest rates at the July meeting.
The Indian rupee (INR) opens with a bearish note against the US dollar (USD) and slides about 86.85 at the beginning of the week. Investors were preparing for a significant negative opening of the USD/INR torque, after the feeling of risk aversion in the market and an abrupt increase in the price of oil due to the participation of the United States (USA) in the assault of Israel to Iran.
The currencies that depend significantly on the import of oil are severely affected by the increase in energy prices.
During the weekend, USA attacked three Iranian nuclear facilities: Fordow, Natanz and Esfahan, with the aim of restricting Tehran of fulfilling their ambition to build nuclear eyes. According to comments from the White House, the decision on whether to attack Iran or will not be taken within two weeks was expected.
The unexpected direct participation of the United States in the tensions of the Middle East has forced investors to move to safe refuge assets, improving the demand of the US dollar as an asset of refuge. The US dollar index (DXY), which follows the value of the dollar against six main currencies, reviews the maximum of 10 days slightly above 99.00.
In retaliation, Iran is preparing to close the Ormuz Strait, through which almost a quarter of global oil is supplied.
The decision to close the entrance door to the oil, which Iran shares with Oman and the United Arab Emirates (EAU), has been approved by the Tehran Parliament and has been sent to the Supreme National Security Council for its final approval, Iran’s state television reported.
What moves the market today: Indian rupee falls to the US dollar in the middle of a state of risk aversion
- The Indian rupe resumes its trip down against the US dollar after a brief setback on Friday to about 86.55. The increase in crude oil prices due to tensions in the Middle East after the direct participation of the US in the Israel-Iran war has pushed the Indian rupee again defensive.
- Market experts prepare for a significant increase in the USD/INR, citing that the highest prices of energy would accelerate the current account deficit of India, which would further weaken Indian rupee.
- According to Bernstein analysts, Indian rupee could be depreciated towards RS. 88 against the US dollar if the tensions between Israel and Iran persist. The private heritage management firm estimated that a sustained increase of 10 $ in crude oil prices could add 0.11% to the Gross Domestic Product (GDP) of the current account deficit.
- Meanwhile, Goldman Sachs has projected that the Brent crude could briefly reach a peak of $ 110 per barrel if the oil flows through the critical pathway be reduced by half for a month and remained below 10% during the next 11 months, Reuters reported. After the US attack to Iran, Brent crude oil has jumped to around $ 78.80, the highest level seen in five months.
- In the domestic front, the minutes of the Bank of the Reserve of India (RBI) published on Friday showed that the Indian Central Bank anticipated cuts in interest rates to send a clear message to the economic agents that it intends to support consumption and investment through lower indebted costs. At the policy meeting, the RBI cut its repurchase rate unexpectedly at 50 basic points (PBS) at 5.5%.
- In the US region, merchants are expected to increase bets in favor of the Federal Reserve (FED) to reduce interest rates at the July policy meeting, since officials are divided on monetary policy perspectives after keeping it stable at the meeting last week.
- On Friday, the governor of the Fed, Christopher Waller, 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 in an interview with CNBC Squawk Box on Friday. He also said that the impact of tariffs imposed by the US president, Donald Trump, will be so great in inflation. “I don’t think the impact of tariff inflation is great, the trend looks good,” Waller said.
- Contrary to Waller of the Fed, the president of the Richmond Federal Reserve, Thomas Barkin, said there is no hurry for cuts in interest rates amid the uncertainty about how much new commercial policies will boost inflation. “I am comfortable with where we are and nothing is burning on any sides [inflación y mercado laboral] In such a way that I suggest that there is a hurry to act, “said Barkin.
Technical analysis: USD/INR aims to review the maximum of two months around 86.95
The Indian rupee rises to about 86.85 against the US dollar on Monday and aims to review a maximum of more than two months of 86.93 registered on Thursday. The short -term trend of the torque remains bullish since the 20 -day exponential mobile average (EMA) is inclined to rise around 86.10.
The 14 -day relative force (RSI) index remains above 60.00, suggesting that the bullish impulse remains intact.
Looking down, the 20 -day EMA is a key support level for the torque. On the positive side, the maximum of April 11, 87.14 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.
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.
