- The Indian rupee quotes on negative terrain in the Asian session on Thursday.
- The demand of the US dollar at the end of the month drags the INR downward, but an increase in foreign fund entries could limit its fall.
- Investors prepare for initial weekly applications for US unemployment subsidy and the final GDP report of the quarter quarter (Q4), which will be published later on Thursday.
Indian rupee (INR) loses impulse on Thursday. Concerns about possible tariff reprisals and the increase in the demand of the US dollar (USD) at the end of the month by importers undermine the Indian currency. In addition, the increase in crude oil prices contributes to the fall of the INR, since India is the third largest oil consumer in the world.
However, the positive perspective in national actions and the renewed entry of foreign funds could raise the local currency. Any significant depreciation of the INR could be limited by the intervention in the currency market of the Reserve Bank of India (RBI). Looking ahead, the initial weekly applications of US unemployment subsidy, the final GDP (GDP) of the fourth quarter (Q4) and the sales of pending housing will be published later on Thursday.
Indian rupee remains weak in global signals
- Foreign investors have bought more than 2 billion dollars in Indian shares in the last four days, while bond fund entries to date were more than 3,000 million dollars.
- On Wednesday night, Trump signed an order to implement a 25% tariff on car imports. Trump added that the tariffs would go into force on April 2 and that the US would begin charging them a day later.
- Trump will allow up to a month of grace for imports of car parts of its proposed 25% tariffs on cars, according to Reuters.
- The orders of the US durable goods increased 0.9% in February, compared to an increase of 3.3% (reviewed from 3.1%) reported in January, according to the US Census Office on Wednesday. This figure was better than the market expectation of a 1%decrease.
The bassist perspective of the USD/INR remains in force
Indian rupee weakens in the day. The bass perspective of the USD/INR pair remains intact since the price remains limited below the exponential (EMA) mobile average of 100 days in the daily temporal framework. The bassist impulse is reinforced by the 14 -day relative force (RSI) index, which is below the midline about 36.0, suggesting that the lower resistance path is down.
The initial support level for the USD/INR is observed at 85.56, the minimum of March 26. The bearish pressure sustained below the aforementioned level could see a fall to 84.84, the minimum of December 19, followed by 84.22, the minimum of November 25, 2024.
On the positive side, the key resistance level for the pair arises in the area of 85.95-86.00, representing the 100-day Ema and the psychological level. Further north, the next obstacle to observe is 86.48, the minimum of February 21, en route to 87.00, the 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.
