- Indian rupee wins traction in Monday’s Asian session.
- The intervention in the currency market by the RBI could help limit the losses of the INR.
- The PMI manufacturing HSBC of India and the USM manufacturing PMI of the US will occupy the center of the stage later on Monday.
Indian rupee (INR) gains strength on Monday. The possible intervention of the Indian Reserve Bank (RBI) could provide some support to the local currency. On the other hand, the last rounds of tariffs of US President Donald Trump about Canada, Mexico and potentially China could boost the US dollar (USD) and exert some sale pressure on the INR. In addition, a recovery in crude oil prices could drag the Indian rupee downward, since India is the third largest oil consumer in the world.
Looking forward, the operators will keep an eye on the index of purchasing managers (PMI) HSBC manufacturing of India for February, which will be published later on Monday. On the US Agenda, the ISM manufacturing PMI will be published.
Indian rupee bounces despite Trump’s tariff threats
- “The markets continue to live with the uncertainty and sway of the multitude of tariff proposals in process,” said Mufg Bank.
- The real gross domestic product (GDP) of India grew by 6.2% year -on -year in the fourth quarter (Q4) of 2024, compared to a 5.6% growth (reviewed from 5.4%) registered in the previous quarter, according to data published by the National Statistics Office (NSO) on Friday. This figure was weaker than the 6.3% expected.
- The US Personal Consumption Expenditure Index (PCE) increased 0.3% in January, in line with expectations, according to the US Economic Analysis Office on Friday.
- The US PCE price index rose 2.5% year -on -year in January, compared to 2.6% in December. The underlying PCE price index, which excludes volatile food and energy prices, rose 2.6% year -on -year in January, lowering 2.9% in December. Both figures aligned with the market consensus.
USD/INR is maintained with positive long -term bias
Indian rupee quotes on negative terrain. The USD/INR torque perspective prevails, with the price well supported above the 100 -day exponential (EMA) mobile average in the daily temporal framework. A greater increase seems favorable since the 14 -day relative force (RSI) index is above the midline about 63.75.
The first upward barrier for the USD/INR appears at 87.53, the maximum of February 28. A bullish candle that breaks above this level could raise a historical maximum about 88.00 and then at 88.50.
On the other hand, the initial support level for the torque is observed in the area of 87.05-87.00, representing the minimum of February 27 and the round level. A rupture of the aforementioned level could drag the following bearish objectives at 86.48, the minimum of February 21, followed by 86.14, the minimum of January 27.
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.
