- Indian rupee is strengthened in the Asian session on Tuesday.
- Positive trends in Indian actions and concerns about the independence of Fed could boost the INR.
- The operators prepare for Harker and Kashkari’s speeches of the Fed later on Tuesday.
The Indian rupee (INR) advances on Tuesday after reaching a maximum of four months in the previous session. The rebound in Indian actions could provide some support to the Indian currency. In addition, anxiety on tariffs and criticisms of US President Donald Trump to the president of the Federal Reserve (Fed), Jerome Powell, could drag the US dollar (USD) down and benefit the INR.
On the other hand, markets will be attentive to the Indian Reserve Bank (RBI), which seems to be buying USD to stop the increase in INR. The growing expectation that the RBI will announce a cut of interest rates in the next policy meeting could weigh on the local currency. The latest data showed that the Indian inflation rate decreased to its lowest level in more than five years in March, well below the average 4% objective of the RBI.
Harker and Neel Kashkari of the Fed are scheduled to speak later on Tuesday. On Wednesday, the Indian HSBC Purchase Managers Index (PMI) for April and the US PMI reports will be at the Center for Care.
Indian rupee gains land for commercial developments between the US and India
- The Prime Minister of India, Narendra Modi, and the US vice president, JD Vance, welcomed “significant progress” in the ongoing negotiations for a mutually beneficial bilateral trade (BTA) agreement.
- According to the US trade representative, they formally announced the completion of the terms of reference for negotiations, establishing a road map for future discussions on shared economic priorities.
- The president of the USA, Donald Trump, criticized Powell de la Fed for continuing to support a way of “waiting and seeing” in monetary policy until there is greater clarity about how the new tariff policy will shape the economic perspectives.
- Trump warned in a social truth publication that the US economy would slower unless Powell reduced interest rates immediately.
- The Economic Advisor of the White House, Kevin Hassett, said Friday that Trump and his team were studying if they could fire Powell from the Fed.
The Basist Perspective of the USD/INR remains below the 100 -day EMA
Indian rupee quotes in a firmer tone in the day. However, operators must take into account that the price remains limited below the average exponential (EMA) medium key of 100 days in the daily graph, which suggests that the long -term bearish trend remains intact. The downward impulse is reinforced by the 14 -day relative force (RSI) index, which is below the midline about 38.10.
The crucial support level for the USD/INR is found in the region of 85.00-84.95, representing the psychological level and lower limit of the descending trend channel. If the bearish pressure intensifies, this could drag around 84.53, the minimum of December 6, 2024. The additional filter to be monitored is 84.22, the minimum of November 25, 2024.
On the other hand, the 100 -day EMA in 85.85 acts as an immediate resistance level for the torque. If the USD/INR remains above this level and buyers intervene, the torque could try to reach 86.55, 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.
