- Indian rupee is strengthened in the Asian session on Tuesday.
- Optimism about commercial conversations between the US and India and constant foreign portfolio investment flows in shares support INR.
- Investors expect the US consumer confidence report and the March Jolts employment offers report, which will be published later on Tuesday.
The Indian rupee (INR) extends its upward trend on Tuesday after registering its best day in more than two weeks in the previous session. Positive developments around commercial conversations between the US and India provide some support for the local currency. The US Treasury Secretary, Scott Besent, said on Monday that many of the main US business partners had made “very good” proposals to avoid US tariffs, and one of the first agreements that will probably be signed will probably be with India. In addition, foreign investors have increased the purchase of Indian shares during the last week, a reversal of the sales pressure observed earlier. This, in turn, acts as a tail wind for Indian rupee.
However, the renewed demand of the US dollar (USD) due to the decrease in tensions between the United States and China could weigh on the Indian currency. In addition, concerns about geopolitical tensions between India and Pakistan could contribute to the decline of the INR.
The US consumer confidence report and the March Jolts Employment Offers report will be published later on Tuesday. All eyes will be placed in the preliminary reading of the US gross domestic product (GDP) for the first quarter (Q1) on Wednesday, before the US Non -Agricultural Payroll (NFP) report, which will be published later on Friday.
Indian rupee gains impulse as foreign portfolio investors (FPI) continue to buy shares
- The rape of the high fire along the control line (LOC) occurred days after the terrorist attack in Pahalgam, which killed 26 people, mostly tourists, in the Baisaran Valley near Pahalgam, Jammu and Kashmir.
- The US Treasury Secretary, Scott Besent, said on Monday that the US government is in contact with China, but depends on Beijing to take the first step to descale the tariff struggle with the US due to the commercial imbalance between the two nations.
- “Vice President Vance was in India last week and talked about substantial progress. I mentioned that negotiations with the Republic of Korea have gone very well, and I think we have had some very substantial negotiations with our Japanese allies,” Besent said.
- The president of the United States, Donald Trump, plans to soften the impact of his automotive tariffs by preventing rights on cars manufactured abroad accumulating with other tariffs and relieving taxes on foreign parts used in car manufacturing, according to the Wall Street Journal. These actions are expected to be announced tomorrow.
- The Fed is expected to maintain interest rates without changes in the 4.25% -4.50% range at the MONETARY POLICY meeting of May 6-7, according to the CME Fedwatch tool.
USD/INR remains bassist below the 100 -day key em.
Indian rupee advances in the day. The USD/INR torque maintains the bearish trend, with the price below the exponential mobile (EMA) average of 100 days in the daily chart. The lower resistance path is down, since the 14 -day relative force (RSI) index is below the midline about 37.00.
A bearish breakdown from the lower limit of the descending trend channel of 84.80 could drag the USD/INR around 84.22, the minimum of November 25, 2024. A sustained trade below the mentioned level could expose 84.08, the minimum of November 6, 2024.
On the other hand, the crucial resistance level appears at 85.80, the 100 -day EMA. A decisive rupture above this level could gain more impulse and point to 86.35, the upper limit of the trend channel.
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.
