- Indian rupee extends the fall in the Asian session on Wednesday.
- A drop in local shares and the continuous demand of the US dollar weigh on the INR.
- The operators prepare for Barkin’s speech of the Fed later on Wednesday.
Indian rupee (INR) depreciates Wednesday. The offers of the US dollar (USD) of foreign banks, probably in the name of custody customers, and the weakening of the Chinese yuan weigh on the Indian currency. In addition, a fall in local actions and an increase in crude oil prices also undermine the INR.
However, a commercial agreement in multiple phases between the US and India could help limit the losses of the local currency. According to Bloomberg, India is discussing a commercial agreement with the US structured in three sections and hopes to reach a provisional agreement before July, when the reciprocal tariffs of US President Donald Trump are expected to enter into force.
The operators will be attentive to the speech of Thomas I. Barkin of the Federal Reserve (FED) later on Wednesday. On Thursday, the preliminary reading of the Indian Purchase Managers Index (PMI) for May for May will be published.
Indian rupee weakens as corporate demand for the US dollar remains high
- “The Indian rupee opened a little weaker and will remain in a range of 85.25/75 during the day, since there is no new market indicator that makes it change course,” said Anil Kumar Bhansali, head of Treasury and Executive Director of Finrex Treasury Advisors LLP.
- The president of the Atlanta Fed, Raphael Bostic, said Tuesday that he will take time for the FED to fully understand the economic effects of the new Trump tariff policy. Due to this prolonged process, he only saw space for a cut of interest rates this year.
- The president of the Fed of St. Louis, Alberto Musalem, said that current policy remains appropriate if commercial tensions are broken in a lasting way.
- The president of the Fed of Cleveland, Beth Hammack, said that a tremendous uncertainty weighs on economic activity. Hammack sees an increase in the chances of a stagflation scenario, where low growth is combined with high inflation.
USD/INR maintains a bassist tone below the 100 -day Ema
Indian rupee weakens in the day. The USD/INR pair maintains the bassist vibes in the daily temporal framework, with the price being below the average exponential (EMA) mobile key of 100 days. An additional consolidation or temporary recovery cannot be ruled out, since the 14 -day relative force (RSI) index is maintained around the midline, suggesting a short -term neutral impulse.
The initial support level for the USD/INR is observed at 85.34, the minimum of May 19. The sustained bearish pressure could extend the fall to 85.00, the psychological level, followed by 84.61, the minimum of May 12.
On the other hand, the first upward barrier is in the 100 -day EMA at 85.60. The green candles that exceed the aforementioned level could potentially raise the torque again to the next resistance in the area of 85.90-86.00, which marks both the upper limit of the trend channel and a round figure.
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.
