- Indian rupee can be seen in Wednesday’s Asian session.
- A weaker US dollar and foreign capital tickets could support the INR, but the highest prices of crude oil could limit their increase.
- The compound PMI data and HSBC services of India for May and the US ISM PMIs will be the outstanding points of Wednesday.
Indian rupee (INR) gains ground on Wednesday. The weakening of the US dollar (USD) after disappointing economic data supports the local currency. Bofa Securities analysts said that Indian markets will probably be among the three main ones in Asia to attract foreign capital tickets once the uncertainties related to tariffs are reduced. This, in turn, could boost the Indian currency.
However, extended profits in crude oil prices could weigh on the local currency. It is worth noting that India is the third largest oil consumer in the world, and the highest prices of crude oil tend to have a negative impact on the value of the INR.
The reports of the purchasing managers index (PMI) compound and services of HSBC of India for May will be published later on Wednesday, together with the PMI of US ISM services. The operators await the decision on the interest rate of the Bank of the Reserve of India (RBI) on Friday, which is expected to deliver a third cut of consecutive rate of 25 basic points (PB). On the US Agenda, the May Employment Report will take the center of the stage.
Indian rupee wins traction in the midst of tariff uncertainty
- It is projected that the economy of India will grow by 6.3% in 2025-26 and 6.4% in 2026-27, according to the Organization for Economic Cooperation and Development (OECD).
- “India within Asia should be one of the best markets for investments, since it has many growth drivers that other markets do not have,” said David Hauner, head of fixed income strategy of global emerging markets in Bofa Securities.
- The number of employment offers on the last business day of April stood at 7.39 million compared to 7.2 million previous, the US Labor Statistics Bureau (BLS) Bureau in the Employment and Labor Rotation Offers Survey (Jolts) on Tuesday. This figure exceeded the expectation of the market of 7.1 million.
- The member of the Board of Governors of the Fed, Lisa D. Cook, said Tuesday that although the US economy seems to be in a healthy position for the moment, the Trump administration’s commercial policies remain the greatest economic threat to stability.
- The president of the Chicago Fed, Austen Goolsbee, said that the US Central Bank will have to wait and see if the tariffs have a great or small impact on the economy.
The USD/INR could resume the climb above the 100 -day EMA key
Indian rupee is strengthened in the day. The USD/INR torque is around the average exponential (EMA) medium key of 100 days in the daily chart. The torque could resume its increase if the price crosses decisively above the 100 -day EMA. Meanwhile, the 14 -day relative force (RSI) index is above the midline about 55.0, which suggests that a higher ascent seems favorable in the short term.
The first bullish barrier for the USD/INR appears at 86.10, the maximum of May 22. Any additional purchase above this level could re -test 86.71, the maximum of April 9, en route to 87.30, the maximum of March 12.
On the other hand, the initial support level is observed at 85.30, the minimum of June 3. The bearish candles and the downward momentum could drag the lowest torque up to 85.04, the minimum of May 27. Further south, the next level of containment to observe is 84.61, the minimum of May 12.
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.
