- Indian rupee quotes on negative terrain on Monday.
- The economic slowdown of India, foreign capital exits and RBI features continue to affect INR.
- The intervention of the RBI and the drop in crude oil prices could limit the fall of the local currency.
The Indian rupee (INR) weakens on Monday, breaking the two -day streak. The slow growth of the Indian economy, the continuous exits of foreign institutional investors (FIIS) and the rate cut of the Bank of the Reserve of India (RBI) dragged the downward local currency in front of the USD.
However, RBI’s intervention selling USD could help limit INR losses. In addition, the fall in crude oil prices probably supports Indian rupee, since India is the third largest crude oil consumer in the world. The commercial balance of India will be published later on Monday. In the US Front, Patrick Harker and Michelle Bowman of the Federal Reserve (Fed) are scheduled to speak. The US market will remain closed on Monday by the president’s holiday.
Indian rupee remains weak in the midst of slow growth and RBI features
- The inflation of the wholesale price index (WPI) of India decreased slightly to 2.31% in January from 2.37% in December, softer than the 2.50% expected.
- “It is unlikely that a sustained recovery of the domestic market is maintained since the FIIS continue in mode of sale. Only a drop in the dollar and the yields of the American bonds will turn the FIIS into buyers,” said Vk Vijayakumar, strategist chief boss of Geojit Financial Services investments.
- The president of the United States, Donald Trump, said last week that the Indian Prime Minister, Narendra Modi, offered to talk about the reduction of tariffs and the importation of more oil and US gas and gas to reduce the deficit commercial between the two countries.
- The US retail sales fell 0.9% in January from the 0.7% increase (reviewed from 0.4%) in December, according to the US Census Office on Friday. This figure was weaker than the market expectation of a 0.1%decrease.
- Industrial production increased an intermennsual 0.5% in January, compared to 1.0% (reviewed from 0.9%) in December, exceeding the estimation of an increase of 0.3%.
USD/INR maintains a positive tone, more consolidation is expected in the short term
Indian rupee quotes weaker in the day. Technically, the USD/INR torque perspective prevails, characterized by the well supported price above the 100 -day exponential mobile average (EMA) in the daily time frame. However, greater consolidation cannot be ruled out since the 14 -day relative force (RSI) index is around the midline.
The psychological level of 87.00 acts as an immediate resistance level for the USD/INR. The profits sustained beyond the mentioned level could allow the bullies to set their objectives at the next levels at a historical maximum about 88.00, en route to 88.50.
Down, the initial support level is observed at 86.35, the minimum of February 12. A rupture of this level could send 86.14, the minimum of January 27.
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.
