USD/INR posts moderate losses on RBI's potential intervention

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USD/INR posts moderate losses on RBI’s potential intervention – Crypto News

Published

3 years ago

November 10, 2023

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Indian Rupee gains traction as RBI’s intervention limits the losses.
India’s economy is estimated to grow 6.5% in this fiscal year.
Investors will monitor the preliminary US Consumer Sentiment data for November.

Indian Rupee (INR) strengthens on Friday as the potential intervention from the Reserve Bank of India (RBI) limited the depreciation in the local currency. In an interview with Nikkei Asia on Thursday, RBI Governor Shaktikanta Das said that geopolitical tensions across the globe have generated economic fragmentation that applies brakes and barriers to growth and supply chains, but he’s confident that India can rise amid the uncertainty.

India’s economy is expected to grow 6.5% this fiscal year, the fastest-growing major economy in the world. However, the Indian Rupee’s upside seems limited as higher oil prices and the higher US Treasury bond yields remain in focus. Looking ahead, market players will monitor the preliminary US Consumer Sentiment for November, which is expected to grow to 63.7.

Daily Digest Market Movers: Indian Rupee trades strongly amid the current uncertain environment

The Reserve Bank of India (RBI) Governor Shaktikanta Das expressed optimism about India’s economic prospects but warned that the route to becoming a prosperous society may not be smooth.
RBI’s Monetary Policy Committee (MPC) in its October meeting, estimated Consumer Price Index (CPI) at 5.4% for 2023-24, a decline from 6.7% in 2022-23.
RBI Governor Das said India remains vulnerable to recurring and overlapping food price shocks and the monetary policy remains focused on keeping inflation at the 4% target.
RBI forecasts India’s Gross Domestic Product (GDP) will grow at 6.3% in the current fiscal year.
The US weekly Initial Jobless Claims rose by 217K versus 220K prior, below the expectation of 218K.
The Continuing Claims climbed to 1.834M from 1.812M in the previous week, the highest level since mid-April.
Fed Chair Jerome Powell said they are not confident that they have achieved a sufficiently restrictive policy to bring inflation down to 2% over time.
Fed Chair Powell further added that the Fed will not hesitate if it’s appropriate to tighten policy further.

Technical Analysis: The Indian Rupee strengthens, the upside seems limited

The Indian Rupee edges higher on the day. The USD/INR pair trades in a familiar range of 83.00–83.35 since September. According to the daily chart, the USD/INR bullish potential remains intact as the pair holds above the key 100- and 200-day Exponential Moving Averages (EMA).

The upper boundary of the trading range at 83.35 acts as a key resistance level for USDINR. A decisive break above 83.35 will pave the way to the year-to-date (YTD) highs of 83.45. The additional upside filter to watch is a psychological round figure at 84.00.

On the downside, a critical contention level will emerge at 83.00, representing the confluence of a low from October 24 and a round mark. Any follow-through selling below 83.00 will see losses extend to a low of September 12 at 82.82, followed by a low of August 4 at 82.65.

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		0.00%	-0.07%	-0.06%	0.09%	0.02%	-0.07%	0.05%
EUR	0.00%		-0.07%	-0.06%	0.08%	0.03%	-0.06%	0.06%
GBP	0.08%	0.07%		-0.01%	0.16%	0.10%	0.02%	0.12%
CAD	0.06%	0.08%	0.00%		0.17%	0.11%	0.00%	0.13%
AUD	-0.09%	-0.10%	-0.17%	-0.17%		-0.06%	-0.18%	-0.03%
JPY	-0.02%	-0.03%	-0.11%	-0.11%	0.08%		-0.10%	0.02%
NZD	0.07%	0.07%	0.00%	-0.01%	0.16%	0.10%		0.12%
CHF	-0.05%	-0.06%	-0.13%	-0.11%	0.04%	-0.03%	-0.12%

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).

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 eys levels, and uses derivatives to hedge its positions.