- The Indian rupee is underlyed pressure when the geopolitical tensions expand between India and Pakistan.
- India's announcement of neutralizing military threats in their northern and western borders has increased risk leap in internal markets.
- It is expected that the Indian reserve bank will enter, signaling its intention to curb rupees.
The Indian Rupee (INR) loses the US dollar (USD), extending the loss of the fourth consecutive session on Friday. The USD/INR pair was opened with a gap about 1% of the previous day. Traders are likely to be awaiting Indian FX reserves related to later.
Inr is facing upgraded pressure in the middle of the Geopolitical tensions between India and Pakistan. India announced that they have neutralized military threats on their northern and western borders, causing a risk leap in internal markets. Market messages from Indian drone attacks and Pakistan's allegations on the shooting of drones, intensifying investor problems and considering the InR were further stuck in the market.
The trader notes that the Indian Reserve Bank (RBI) is likely to intervene in order to tolerate his unwanted rupee depreciation. Without RBI support, he warns that acceleration of the USD/INR pair will accelerate further upside down.
The volumes of Indian rupees grew after Indian stroke in Pakistan, which indicates that the currency can pass through two nuclear weapons on the back of the elevated tension patch. The increase in volumes did not show a significant direction of prejudice. Sharing between the speech and the possibilities of putting it was quite typical. This shows that the markets play volatility rather than the positioning of rupees, Reuters named the Bank's elder Forex trader.
The USD/INR values the stronger US dollar (USD), which is increased by the Hawkishh attitude of the Federal Reserve (Fed) and increasing crude oil prices increase pressure on Indian rupees. Although the INR is under stress, the potential support of the exterior investor (FII) may limit the negative risk, unless the voltages at the control circle at the entire control limit.
Indian rupees are depreciated by the US dollar on the rise after strong US data
- The US Dollar Ends (DXY), which measures the US dollar value (USD) to the currency basket, trades about 100.60, incited by strong US economic data. US President Donald Trump announced with the United Kingdom (Britain) a “big” trade deal, although the main tariffs remains 10%, which restricts market enthusiasm.
- US citizens, who submitted new unemployment insurance applications, decreased to 228,000 for the week ended on May 3. This edition was slightly below preliminary estimates and was lower than last week's unrevited account of 241,000. The report also highlighted the seasonally adjusted insured unemployment rate by 1.2%, while the four-week mobile average grew from last week to 1k to 226,000. Moreover, the requirements of the unemployed continued to fall to 29,000 to reach 1.879 million of the week ending on April 26.
- President Trump has adopted a strong attitude towards Chinese trade policy after appointing a new ambassador to Beijing. Although tariff liberation is discussed, the administration seems careful, Trump claimed that they “do not look for so many exceptions”.
- According to the Global Times, referring to the Chinese Embassy in the United States, Beijing is unlikely to reduce tariffs before talks in Switzerland. This adds to the insecurity of the market and suppresses the risk mood.
- Fed kept interest rates on Wednesday on Wednesday, 4.25-4.50%, but his statement recognized the growing risks of inflation and unemployment, injecting fresh uncertainty into the markets. According to the CME Fedwatch tool, market participants are still waiting for a reduced quarterly rate in July.
- Fed Chairman Jerome Powell noted at a press conference that US trade tariffs could prevent Fed inflation and employment goals in 2025. Powell pointed out that persistent political instability could force Fed to take more patient waiting and viewing on future interest rates.
- US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer will meet in Geneva, Geneva, in Geneva, Vice -President He Lifieng, in Geneva, celebrating the first high -level talks after the US introduced tariffs that escalated for global trade disputes.
- India and Pakistan traded on the accusations of cross -border drone attacks on Thursday. According to the Indian Army, Pakistan's armed forces carried several strikes using drones and other ammunitions across the western border of India throughout Thursday and Friday.
- The Indian government confirmed that it was aimed at anti -aircraft radars and systems in several places in Pakistan, against Pakistan's attempt to find several military targets in North and West.
- Traders believe that India's 10-year-old government bond yield will range from 6.30 to 6.40%this week, focusing on bond purchases and geopolitical developments between India and Pakistan.
- The recent decline in yield is due to expectations for further interest rates and the Indian Reserve Bank (RBI), which preserves the surplus liquidity in the banking system through continued open -market operations (OMO), Reuters reports.
USD/INR rises near 86.00, rising to the upper limit of the channel
The Indian rupee continues to weaken, USD/INR -pair trades on Friday near 85.90. The technical characteristics of the diagram of the day retain the prejudice of the bear as the couple remains in the descending channel. However, the 14-day relative strength index (RSI), which has risen to a higher level of 50 levels, suggests the impulse change, indicating the emotion of the bullish.
Immediate support consists of a nine -day exponential moving average (mother) at 85.05, closely linked to the main psychological level of 85.00. A decisive pause under this zone can damage short -term bullish tests and open the door to fall near the lower border of the channel near 84.00. Violation of this level can increase sales pressure by helping a couple of its eight -month low level 83.76.
The four-higher move saw that the USD/INR pair is a challenge for the upper limit of the descending channel around 86.10, with additional obstacles to the two-month highest level 86.71.
USD/INR: daily chart
Indian rupee
Indian Rupee (INR) is one of the most sensitive currencies to external factors. The price of crude oil (the state largely depends on the imported petroleum), the US dollar value – most of the trade in USD – and foreign investment levels are all influential. Direct intervention in the Indian Reserve Bank (RBI) in the FX markets to keep the exchange rate stable, as well as the level of interest rates set by RBI, are also the main affecting factors of rupees.
The Indian Reserve Bank (RBI) is actively interfering with the Forex markets to maintain a stable exchange rate to help facilitate trade. In addition, RBI tries to maintain the inflation rate with its 4% purpose, adjusting interest rates. Higher interest rates usually strengthen rupees. This is due to the role of the carrier trade in which investors borrow in lower interest rates to invest their money in countries, “providing relatively higher interest rates and profits from the difference.
Macroeconomic factors affecting the value of rupees include inflation, interest rates, economic growth rate (GDP), trade balance and foreign investment. A higher growth rate can cause more foreign investments, increasing demand for rupees. The less negative trade balance will eventually lead to a stronger rupee. Higher interest rates, especially real rates (interest rates less inflation), are also positive for rupees. The risk environment can cause larger direct and indirect investments (FDI and FII), which also benefits rupees.
Higher inflation, especially if it is relatively higher than Indian peers, is generally negative about the currency as it reflects the devaluation through oversupply. Inflation also increases export costs, causing more rupees to buy foreign imports, which is rupee-negative. At the same time, higher inflation usually leads to raising interest rates in the Indian Reserve Bank (RBI) and may be positive for rupees as the demand for international investors is higher. The opposite effect applies to lower inflation.
