- Indian rupee wins traction in Monday’s Asian session.
- The weakening of the US dollar generally supports the INR, but the highest prices of crude oil could limit their profits.
- Investors prepare for the inflation of the February WPI of India and the US retail sales data, which will be published later on Monday.
Indian rupee (INR) is strengthened on Monday. Concerns about slow growth in the US economy due to the commercial policies of the administration of President Donald Trump weigh on the dollar and provide some support to the INR. However, the potential for appreciation of the local currency could be limited in the midst of an increase in crude oil prices. 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.
Looking ahead, the inflation of the wholesale price index (WPI) of February (WPI) of India will be published later on Monday. On the US Agenda, February retail sales data will offer clues about the feeling of the US consumer and if political uncertainty has caused a slowdown in spending. Investors will closely follow the decision of interest rates of the Federal Reserve (FED) on Wednesday, which is expected to keep interest rates without changes. The main approach will be in the Fed policy orientation.
Indian rupee operates with slight profits in the midst of multiple winds against
- Indian rupee is expected to face a strong resistance around 86.50 while finding support in the area of 87.40-50, said Dilip Parmar, currency research analyst at HDFC Securities.
- India’s economic indicators for February reflect a moderation in inflation, an improvement in industrial production and strong corporate profits, according to the latest SBI Ecowrap report.
- It is projected that India will be the third largest economy in the world by 2028, since it becomes the most wanted consumption market in the world and gains participation in global production, driven by macroeconomic stability and better infrastructure, said Morgan Stanley.
- The preliminary reading of the consumer’s feeling index of the University of Michigan (UOM) showed that the index reached its lowest level since November 2022, falling to 57.9 from 64.7 in the previous reading. This reading was below the 63.1 market consensus.
- The five -year consumer inflation expectations of the UOM jumped to 3.9% in March, compared to 3.5% in February.
- The markets expect that the Fed maintain its position when you conclude your two -day meeting on Wednesday. Markets have discounted almost 75% probabilities of a quarter quarter reduction in the policy rate for June, according to the Fedwatch tool of the CME.
USD/INR remains limited within a symmetric triangle
Indian rupee operates stronger in the day. The USD/INR torque has consolidated near the lower limit of a symmetrical triangle in the daily chart. The constructive perspective of the torque is maintained, with the price above the exponential (EMA) mobile average of 100 days. However, more consolidation cannot be ruled out, since the 14 -day relative force index (RSI) is above the midline, suggesting a short -term neutral impulse.
The immediate resistance level for the USD/INR arises at 87.24, the upper limit of a symmetrical triangle. A sustained increase above this level could pave the way to 87.53, the maximum of February 28, en route to a historical maximum of 88.00.
On the contrary, a decisive rupture below the minimum of March 6 and the lower limit of the triangle pattern in 86.86 could expose 86.48, the minimum of February 21. Below, the additional filter to the decline to take into account is 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.
