- Indian rupee is trading in the Asian session on Monday.
- It supports concerns about financial health and the weakest dollar of the US dollar inr.
- Red rates of RBI stakes and rising crude oil prices may reduce the upward trend.
Indian flat lines (INR) on Monday after it has received its best performance for more than two years in the previous session. According to Bloomberg, the largest gain of the Indian currency was seen after November 11, 2022, when he was estimated at 99 Paise in one day. It provides concerns related to US financial health and the sale of the US dollar from foreign banks support for the local currency.
However, the expectations for low interest rates by the Indian Reserve Bank (RBI) may affect inr. High crude oil prices can contribute to the negative side of INR. It should be noted that India is the third largest oil consumer in the world, and it tends to rise in crude oil prices to a negative impact on the inr value. The minutes of the Federal Open Market Committee (FOMC) will be the most prominent later on Wednesday before the US consumption expenditures (PCE) – the price index report.
Indian rupee stability on the news of the customs tariff
- US President Donald Trump said on Sunday that he agreed to an extension on the deadline of the European Union (European Union) until July 9, which canceled his threat by 50 % from June 1.
- India has exceeded Japan to become the fourth largest economy in the world according to the international IMF data.
- On Friday, the Federal Reserve Chairman of Chicago, Austan, said on Friday that the latest tariff threats in Trump had complicated policy and may lead to changes to interest rates.
- The head of the Kansas City City Jeffrey Schmid city said that officials will rely on difficult data to make interest rate decisions and the Federal Reserve should be careful of the amount of focus it places on soft data.
- The markets expect that the American Federal Reserve (Fed) will reduce twice this year, with the next step until September.
Usd/INR holds a declining tone after facing rejection in EMA for 100 days
The Indian rupee is trading a flat note per day after facing the rejection of the SIA moving average for 100 days (EMA). The US dollar pair/INR maintains a dirt vitality on the daily chart, with the support of the 14 -day relative index (RSI), which stands below the midfield near 47.00.
The initial support for USD/INR at the psychological level appears 85.00. The interruption of this floor can lead to a decrease to 84.84, which is the lowest level on May 12. The violation of this level can display the next downward goals at 84.05, which is the minimum direction channel.
In the upward direction, the immediate resistance level is 85.58, EMA for 100 days. Any purchase of follow -up to 85.80, the upper border of the direction channel will be probably sent. To the north, the next Aqaba is located in 86.70, the highest level on April 9.
Indian rupee questions and answers
Indian rupee (INR) is one of the most sensitive currencies for external factors. The price of crude oil (the country depends greatly on imported oil), and the value of the US dollar – most trade in US dollars – and the level of foreign investment are all influential. The direct intervention by the Indian Reserve Bank (RBI) in the foreign currency markets to maintain the exchange rate is stable, as well as the level of interest rates that RBI has placed, significant impressive factors in the rupee.
The Indian Reserve Bank (RBI) is actively interfering in the Forex markets to maintain a stable exchange rate, to help facilitate trade. In addition, RBI tries to keep the inflation rate in its goal by 4 % by setting interest rates. High interest rates usually enhance rupee. This is due to the role of “Trade Trade” in which investors in countries that have lower interest rates are borrowed in order to put their money in countries “that provide relatively higher interest rates and profit from the teams.
The total economic factors that affect the value of rupees include inflation, interest rates, economic growth rate (gross domestic product), trade balance, and flows from foreign investment. A higher growth rate can lead to more investment abroad, which increases the demand for rupee. The less negative trade balance will eventually lead to a stronger rupee. High interest rates, especially real prices (less inflationary interest rates) are also positive for rupee. The risk environment can lead to increased direct and indirect foreign investment flows (FDI and FII), which also benefits rupee.
The highest inflation, in particular, if it is relatively higher than its peers in India, is generally negative for the currency because it reflects the reduction in the value of the currency. Inflation also increases the cost of exports, which sells more rupees to buy foreign imports, which is negative rupee. At the same time, high inflation usually raises the Indian Reserve Bank (RBI) interest rates, and this may be positive for rupee, due to increased demand from international investors. The opposite effect applies to low inflation.
