- The Indian rupe extends its fall against the US dollar, since the first one weakens due to the sale of FIIS in the Indian markets.
- The tariff agreement between the US and the EU has strengthened the US dollar.
- Investors expect the FED policy and a USA data series.
The Indian rupee (INR) records a new four months against the US dollar (USD) when opening on Tuesday. The USD/INR pair falls to about 87.08 while Indian rupee continues to face winds against foreign funds by institutional investors and a decent recovery in the price of oil.
Theoretically, the exit of a significant amount of foreign funds by portfolio investors decreases the attractiveness of developing economies, such as Indian rupee.
On Monday, foreign institutional investors (FIIS) sold shares worth 6,082.47 million rupees in Indian markets. They have been net sellers in the markets of cash shares in the last six negotiation sessions. Until now, the FIIS have sold shares worth 36,591.13 million rupees in the cash market.
The impact of the incessant sale of the FIIS has also strongly weighed on the Indian indices. The NIFTY50 has fallen more than 4% from its recent levels of 25,669.35. Meanwhile, the signs of moderate growth in the quarterly gains of Indian companies have also affected Indian bags.
Meanwhile, a recovery movement in the price of oil due to the confirmation of a tariff agreement between the United States (USA) and the European Union (EU) has also weighed over Indian rupee. The attractiveness of the currencies of those nations that depend largely on oil imports to meet their energy needs is diminished if the price of oil increases.
What moves the market today: Indian rupe
- The pure strength of the US dollar after the confirmation of the USA Tariff Agreement. The US dollar index (DXY), which tracks the value of the dollar against six main currencies, extends its rise to about 98.70 at the time of writing. The USD index approaches its monthly maximum about 99.00.
- Market experts have argued that the US Commercial Agreement.-Washington favors, as it will receive 15% tariffs on Brussels imports. Investors had anticipated a zero to zero tariff agreement between the economies on both sides of the Atlantic. In addition, the EU has promised to invest 600,000 million dollars in the US, in addition to existing expenses.
- “While the fortress of the US dollar may reflect the perception that the new US Agreement.
- Meanwhile, investors await a US economic data series, such as the Personal Consumer Expenses Price Index (PCE) and Jolts employment offers data for June, the preliminary GDP of the second quarter and the ISM manufacturing PMI data for July, this week, and the monetary policy announcement of the Federal Reserve (Fed) on Wednesday.
- In Tuesday’s session, the US Jolts job offers report is expected to show that companies published 7.55 million new jobs in June, slightly below 7.77 million in May.
- On Wednesday, the Fed will surely maintain stable interest rates in the range of 4.25%-4.50%. This would be the fifth consecutive decision of the Fed to maintain interest rates at their current levels. Investors will closely follow the comments of the president of the FED, Jerome Powell, in search of new clues about the monetary policy perspective for the rest of the year.
Technical Analysis: USD/INR Wins strongly at about 87.00
The USD/INR pair jumps at about 87.08 when opening on Tuesday, the highest level seen in more than four months. The torque is firmly negotiated while the 20 -day exponential mobile average (EMA) is inclined up to about 86.35, indicating a strong upward trend.
The 14-day relative force (RSI) index oscillates within the range of 60.00-80.00, suggesting a strong bullish impulse.
Looking down, the 20 -day EMA will perform as a key support for the pair. On the positive side, the maximum of March 11 in 87.56 will be a critical obstacle to the pair.
Indian Rupia – Frequently Questions
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.
