USD/INR rebounds on weaker US Dollar, geopolitical tensions eyed – Crypto News – Crypto News
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Indian rupee steadies around 82.70 ahead of Fed, RBI decisions Indian rupee steadies around 82.70 ahead of Fed, RBI decisions

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USD/INR rebounds on weaker US Dollar, geopolitical tensions eyed – Crypto News

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  • Indian Rupee gains traction on Tuesday, backed by the softer US Dollar. 
  • Higher oil prices amid the rising tensions in the Middle East and Eastern Europe could weigh on the INR. 
  • US Conference Board Consumer Confidence Index, Durable Goods Orders, and House Price Index will be released on Tuesday. 

Indian Rupee (INR) recovers some lost ground on Tuesday amid the weaker US Dollar (USD). Nonetheless, the INR fell to an all-time low of 83.48 on Friday due to broad weakness in its Asian peers and the aggressive local demand for the USD. Meanwhile, the renewed USD demand and higher oil prices amid the escalating geopolitical tensions in the Middle East and Eastern Europe might drag the INR lower and cap the INR’s upside for the time being. 

The US Consumer Confidence report by the Conference Board, Durable Goods Orders, and the FHFA’s House Price Index are due on Tuesday. Later this week, the US Gross Domestic Product Annualized (Q4) will be released on Thursday, which is expected to remain steady at 3.2%. Attention will shift to the US Personal Consumption Expenditures Price Index (PCE) data for February. The headline PCE is estimated to show an increase of 0.4% MoM, while the Core PCE is projected to rise by 0.3% MoM. On the Indian docket, the Indian Current Account data will be released on Thursday. 

Daily Digest Market Movers: Indian Rupee stays firm despite global headwinds

  • India’s foreign exchange reserves reached an all-time high of $642.49 billion for the week ended March 15, according to the Reserve Bank of India (RBI).
  • The rise in foreign exchange reserves was boosted by the maturity of a $5 billion Dollar/Rupee swap that matured on March 11.
  • India’s Gross Domestic Product (GDP) growth estimate for the current fiscal year has revised to 7.6% from 7.3%, signaling the strength of the Indian economy. 
  • The RBI is likely to keep the repo rate on hold at 6.50% at least until the end of Q2 of 2024 and expects to cut interest rates by 25 basis points (bps) in Q3 2024. 
  • The US February New Home Sales dropped 0.3% MoM from a 1.7% gain in January, below market expectations for a 2.3% MoM rise. 
  • The Dallas Fed Manufacturing Survey fell to -14.4 in March from the previous reading of -11.3. 

Technical Analysis: Indian Rupee resumes longer-term uptrend 

Indian Rupee trades strongly on the day. However, USD/INR resumes its upside in the longer term since the pair surged above a multi-month-old descending trend channel last week. 

In the near term, the bullish outlook of USD/INR remains intact as the pair holds above the key 100-day Exponential Moving Average (EMA) on the daily chart. Additionally, the 14-day Relative Strength Index lies above the 50 midline, indicating there is still room for near-term USD/INR appreciation. 

An all-time high of 83.49 remains a tough nut to crack for USD/INR buyers. A decisive break above this level will pave the way to the 84.00 psychological level. On the flip side, the resistance-turned-support level at 83.20 acts as an initial support level. The crucial contention level is seen at the confluence of the 100-day EMA and the round figure of the 83.00 mark. 

US Dollar price today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the New Zealand Dollar.

  USD EUR GBP CAD AUD JPY NZD CHF
USD   -0.05% -0.04% -0.05% -0.13% -0.05% -0.14% 0.02%
EUR 0.05%   0.00% -0.01% -0.08% 0.00% -0.09% 0.06%
GBP 0.04% 0.01%   -0.01% -0.08% 0.00% -0.08% 0.06%
CAD 0.06% 0.01% 0.01%   -0.07% 0.00% -0.08% 0.07%
AUD 0.12% 0.08% 0.08% 0.07%   0.09% -0.01% 0.14%
JPY 0.04% 0.00% -0.01% -0.01% -0.07%   -0.08% 0.05%
NZD 0.14% 0.09% 0.10% 0.09% 0.01% 0.10%   0.16%
CHF -0.01% -0.06% -0.06% -0.07% -0.14% -0.05% -0.16%  

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

 

Indian Rupee FAQs

The Indian Rupee (INR) is one of the most sensitive currencies to external factors. The price of Crude Oil (the country is highly dependent on imported Oil), the value of the US Dollar – most trade is conducted in USD – and the level of foreign investment, are all influential. Direct intervention by the Reserve Bank of India (RBI) in FX markets to keep the exchange rate stable, as well as the level of interest rates set by the RBI, are further major influencing factors on the Rupee.

The Reserve Bank of India (RBI) actively intervenes in forex markets to maintain a stable exchange rate, to help facilitate trade. In addition, the RBI tries to maintain the inflation rate at its 4% target by adjusting interest rates. Higher interest rates usually strengthen the Rupee. This is due to the role of the ‘carry trade’ in which investors borrow in countries with lower interest rates so as to place their money in countries’ offering relatively higher interest rates and profit from the difference.

Macroeconomic factors that influence the value of the Rupee include inflation, interest rates, the economic growth rate (GDP), the balance of trade, and inflows from foreign investment. A higher growth rate can lead to more overseas investment, pushing up demand for the Rupee. A less negative balance of trade will eventually lead to a stronger Rupee. Higher interest rates, especially real rates (interest rates less inflation) are also positive for the Rupee. A risk-on environment can lead to greater inflows of Foreign Direct and Indirect Investment (FDI and FII), which also benefit the Rupee.

Higher inflation, particularly, if it is comparatively higher than India’s peers, is generally negative for the currency as it reflects devaluation through oversupply. Inflation also increases the cost of exports, leading to more Rupees being sold to purchase foreign imports, which is Rupee-negative. At the same time, higher inflation usually leads to the Reserve Bank of India (RBI) raising interest rates and this can be positive for the Rupee, due to increased demand from international investors. The opposite effect is true of lower inflation.

 

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