USD/INR falls as traders brace for US NFP release – Crypto News – Crypto News
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USD/INR falls as traders brace for US NFP release – Crypto News

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  • The Indian Rupee gains traction in Friday’s Asian session. 
  • Recovery in foreign inflows, weaker US Dollar and lower crude oil prices support the INR. 
  • The Indian HSBC PMI and US employment data will be the highlights later on Friday. 

The Indian Rupee (INR) trades on a positive note on Friday. A robust recovery in local equities provides some support to the Indian currency. Additionally, the safe haven status of the US Dollar (USD) might be diminished due to concerns about how trade policy may impact growth in the US. This, in turn, might help limit the INR’s losses. The fall in crude oil prices could also help the Indian Rupee rebound as India is the world’s third-largest oil consumer. 

Traders brace for the final readings of India’s HSBC Composite and Services Purchasing Managers Index (PMI), which are due later on Friday. On the US docket, all eyes will be on the US March employment data, including Nonfarm Payrolls (NFP), Unemployment Rate and Average Hourly Earnings. If the reports show a stronger-than-expected outcome, this could boost the Greenback against the INR in the near term. 

Indian Rupee gathes strength ahead of highly-anticipated US NFP data

  • Trump said on Wednesday that he would impose 26% tariffs on imports from India effective from April 9, a component of his comprehensive plan to place duties on all US imports. 
  • The US ISM Services Purchasing Managers Index (PMI) eased to 50.8 in March from 53.5 in February. This reading came in lower than the estimation of 53.0.
  • Fed Vice Chair Philip Jefferson said late Thursday that interest rates remain well positioned despite a high degree of uncertainty in the economic outlook. Jefferson added that there is no need to be in a hurry on policy rate adjustments.
  • Fed Governor Lisa Cook noted that the US central bank can take its time to assess a highly unsettled environment before moving interest rates again, amid risks inflation could worsen due to tariffs, per Reuters. 
  • Short-term interest-rate futures are now pricing in nearly 70% odds of a Fed rate cut in the June meeting, up from about 60% before the tariffs were announced, according to the CME FedWatch tool. 

USD/INR’s bearish bias lingers despite mild recovery

The Indian Rupee edges higher on the day. The USD/INR pair paints a negative picture on the daily chart as the price remains capped below the key 100-day Exponential Moving Average (EMA). Nonetheless, the 14-day Relative Strength Index (RSI) reaches oversold territory below the 30.00 mark, suggesting that a temporary recovery or further consolidation cannot be ruled out in the near term. 

In the bearish case, the low of April 3 at 85.20 acts as an initial support level for USD/INR. Further south, the next contention level is seen at the 85.00 psychological level, followed by 84.84, the low of December 19. 

On the bright side, the immediate resistance level to watch is 85.87, the 100-day EMA. Sustained trading above the mentioned level could pave the way to 86.48, the low of February 21, en route to 87.00, the round mark. 

RBI FAQs

The role of the Reserve Bank of India (RBI), in its own words, is “..to maintain price stability while keeping in mind the objective of growth.” This involves maintaining the inflation rate at a stable 4% level primarily using the tool of interest rates. The RBI also maintains the exchange rate at a level that will not cause excess volatility and problems for exporters and importers, since India’s economy is heavily reliant on foreign trade, especially Oil.

The RBI formally meets at six bi-monthly meetings a year to discuss its monetary policy and, if necessary, adjust interest rates. When inflation is too high (above its 4% target), the RBI will normally raise interest rates to deter borrowing and spending, which can support the Rupee (INR). If inflation falls too far below target, the RBI might cut rates to encourage more lending, which can be negative for INR.

Due to the importance of trade to the economy, the Reserve Bank of India (RBI) actively intervenes in FX markets to maintain the exchange rate within a limited range. It does this to ensure Indian importers and exporters are not exposed to unnecessary currency risk during periods of FX volatility. The RBI buys and sells Rupees in the spot market at key levels, and uses derivatives to hedge its positions.

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