- Indian rupee weakens in Friday’s Asian session.
- The demand for USD and foreign portfolio outlets could drag the INR down.
- The preliminary data of the PMI of HSBC India and the PMI of the US S&P will be the points highlighted later on Friday.
The Indian rupee (INR) loses ground, breaking the two -day streak on Friday. The increase in the demand for US dollars (USD) by foreign banks operating in India, the exits of foreign portfolio of Indian shares and the uncertainty around the fees ads of the president of the USA, Donald Trump, They weigh on the local currency.
However, the Bank of the Reserve of India (RBI) allowed Indian rupee to move in both directions with a minimal intervention. This, in turn, could help limit inr losses. In addition, a fall in crude oil prices could provide some support to INR, since India is the third largest oil consumer in the world.
Investors will be attentive to the preliminary reading of the Indian HSBC PMI) Purchase Management Index, which will be published later on Friday. On the US Agenda, the preliminary data of the PMI of S&P for January will be the center of attention.
Indian rupee is still weak in the midst of President Trump’s demands
- Moody’s Ratings pointed out on Thursday that the Indian rupee has depreciated around 5% in the last two years and has fallen 20% in the last five years, making it one of the coins with the worst performance in the south and southeast of Asia .
- Attributing the fall of Indian rupee only to the strengthening of the US dollar, said former Governor of the RBI, Raghuram Rajan. He added that any intervention of the Indian Central Bank in this could end up harming Indian exports, even while urging policy responsible to focus on creating more jobs and increasing household consumption.
- Trump declared in the World Economic Forum in Davos, Switzerland, that he would ask Saudi Arabia and the organization of oil export countries (OPEC) to lower the price of oil.
- “With oil prices going down, I will demand that interest rates go immediately, and in the same way they should be going down worldwide, Trump said.
- The initial applications for unemployment subsidy in the US for the week that ended on January 18 increased to 223K, compared to 217K in the previous week, according to the US Department of Labor (DOL) on Thursday. This reading exceeded the 220k market consensus.
- Continuous applications for unemployment subsidy increased 46K to 1,899m for the week that ended on January 11.
The USD/INR bullish trend remains without interruptions
Indian rupee quotes down on the day. The positive vision of the USD/INR torque is maintained, with the price remaining above the ascending trend line and the exponential (EMA) mobile average of 100 days in the daily chart. The lower resistance path is upward, since the 14 -day relative force (RSI) index is above the midline about 66.70.
The historical maximum of 86.69 acts as an immediate level of resistance for the USD/INR. Any additional purchase above the mentioned level could attract some buyers to the 87.00 psychological brand.
On the bearish side, the initial support level is observed in 86.18, the minimum of January 20. A rupture of this level could see the next target at 85.85, the minimum of January 10, followed by 85.65, the minimum of January 7.
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.
