- Indian rupee remains flat in the Asian session on Monday.
- The growing concerns about US fiscal health and the weakening of the US dollar support in.
- The expectations for cutting RBI rates and the increase in prices of crude oil could limit the increase of the INR.
Indian rupee (INR) remains stable on Monday after reaching its best performance in more than two years in the previous session. According to Bloomberg, the greatest gain of the Indian currency was observed after November 11, 2022, when around 99 lands were appreciated in a single day. The growing concerns about US fiscal health and the sale of US dollars from foreign banks provide support to the local currency.
However, the expectations of lower interest rates by the Bank of the India Reserve (RBI) could weigh on the INR. An increase in crude oil prices could contribute to the fall of the INR. It is worth noting that India is the third largest oil consumer in the world, and the highest prices of crude oil tend to have a negative impact on the value of the INR. The minutes of the Federal Open Market Committee (FOMC) will be the culminating point later on Wednesday, before the US Personal Consumption Expenditure Index (PCE).
Indian rupee is stabilized after the news of the pause in tariffs
- The president of the USA, Donald Trump, said on Sunday that he agreed to an extension in the deadline of tariffs to the European Union (EU) until July 9, withdrawing his threat from a 50% tariff from June 1.
- India has surpassed Japan to become the fourth largest economy in the world, according to IMF data.
- The president of the Federal Reserve of Chicago, Austan Goolsbee, said Friday that Trump’s latest tariff threats have complicated politics and have probably postponed changes in interest rates.
- Kansas City Fed President Jeffrey Schmid said that officials will be based on concrete data to make decisions about interest rates and that the Fed needs to be careful with the importance it gives to soft data.
- The markets expect the US Federal Reserve (FED) to cut rates twice this year, being the next movement in September.
The USD/INR maintains a bassist tone after facing rejection in the 100 -day Ema
The Indian rupe is quoted flat in the day after facing rejection in the average exponential (EMA) mobile key of 100 days. The USD/INR torque maintains the bassist vibes in the daily graph, backed by the 14 -day relative force (RSI) index, which is below the midline about 47.00.
The initial support level for the USD/INR is observed at the psychological level of 85.00. A rupture below this floor could trigger a fall to 84.84, the minimum of May 12. A rupture of this level could expose the following bearish objectives at 84.05, the lower limit of the trend channel.
Upwards, the immediate resistance level to be monitored is 85.58, the 100 -day EMA. Any additional purchase could bring the price again to 85.80, the upper limit of the trend channel. Further north, the next obstacle is found in 86.70, the maximum of April 9.
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.
