- Indian Rupee posts modest gains amid the further escalation of geopolitical tensions in the Middle East.
- The rising geopolitical tension between Israel-Hamas might limit the INR’s upward path.
- The Federal Reserve’s Beige Book update showed the US economic outlook had "little to no change" between September and early October.
The Indian Rupee (INR) edges higher against the US Dollar (USD) on Thursday. However, the further escalation of geopolitical tensions in the Middle East and the rise in oil prices might cap the upside of the Indian Rupee and benefit a safe-haven asset like the USD. Furthermore, the Indian Rupee might encounter challenges as a $5 billion RBI swap transaction is set to mature next week. Traders are concerned about the Dollar supply in the Indian banking system as the Reserve Bank of India (RBI) intends to buy USD for its reserves instead of extending the deal.
That being said, elevated oil prices might continue to linger as a risk factor for the Indian Rupee. Market participants will take more cues from the weekly US Jobless Claims and the Philly Fed index on Thursday. The Federal Reserve Chair Powell is also scheduled to speak. On Friday, the attention will shift to India’s FX Reserve and RBI Meeting Minutes.
Daily Digest Market Movers: Indian Rupee upside remains limited ahead of Fed Powell's speech
- The US Building Permits for September fell to 1.475M, above the estimated 1.45M.
- The US Housing Starts for the same period rose to 1.35M, below the market consensus of 1.38M.
- According to the Beige Book, US economic activity showed "little to no change" between September and early October.
- Federal Reserve (Fed) Governor Christopher Waller stated that it's too soon to tell if more policy rate action is needed while adding that the decision will depend on data.
- US Retail Sales for September rose by 0.7% MoM, beating the market consensus of 0.3%. Retail Sales Control Group climbed 0.6% MoM versus 0.2% prior.
- The Indian Wholesale Price Index (WPI) for September came in at -0.26% versus 0.52% prior, below the market consensus of 0.50%.
Technical Analysis: Remains confined in a narrow trading band of 83.15-83.30
Indian Rupee has hovered in a narrow range between 83.15 and 83.30 this week. The USD/INR pair holds above the 100- and 200-day Exponential Moving Averages (EMA) on the daily chart, indicating that the path of least resistance for the pair is to the upside. Some follow-through buying could pave the way to the all-time highs around 83.45 en route to a psychological round mark at 84.00. On the downside, the 83.00–83.10 region acts as a critical support level for the USD/INR pair. A break below this support zone could lead to a drop in the pair towards 82.82 (low of September 12).
US Dollar price today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.05% | 0.16% | 0.13% | 0.44% | 0.02% | 0.46% | 0.04% | |
| EUR | -0.04% | 0.12% | 0.08% | 0.41% | -0.03% | 0.40% | -0.03% | |
| GBP | -0.17% | -0.11% | -0.03% | 0.31% | -0.14% | 0.30% | -0.13% | |
| CAD | -0.13% | -0.07% | 0.03% | 0.30% | -0.10% | 0.34% | -0.11% | |
| AUD | -0.45% | -0.39% | -0.29% | -0.31% | -0.43% | 0.01% | -0.43% | |
| JPY | 0.00% | 0.01% | 0.13% | 0.10% | 0.43% | 0.44% | 0.01% | |
| NZD | -0.47% | -0.42% | -0.33% | -0.33% | -0.02% | -0.43% | -0.43% | |
| CHF | -0.02% | 0.04% | 0.14% | 0.13% | 0.44% | 0.00% | 0.44% |
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
What is the role of the Reserve Bank of India?
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.
How do the decisions of the Reserve Bank of India affect the Rupee?
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.
Does the Reserve Bank of India directly intervene in FX markets?
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.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD tumbles further and hit new YTD lows near 1.0580
The Greenback now resumes its uptrend and advance to new highs. forcing EUR/USD to abandon its initial constructive stance and reach new yearly lows in the 1.0580 region on Wednesday.
GBP/USD accelerates its losses below 1.2700
GBP/USD breaks below the 1.2700 support on the back of the sudden resurgence of buying interest in the US Dollar following US CPI data and some hawkish remarks from the Fed's Logan.
Gold extends slide to fresh two-month low
After shedding some ground throughout the first half of the day, the US Dollar is back in fashion. XAU/USD trades at its lowest in two months in the $2,580 region and is technically poised to extend its slump.
Bitcoin Price Forecast: Chances of pullback increase as miner selling ramps up
Bitcoin (BTC) price extends its decline for a second consecutive day on Wednesday, trading slightly down at around $87,600 after a 30% surge since November 5 pushed BTC to a new all-time high at $89,940.
Trump vs CPI
US CPI for October was exactly in line with expectations. The headline rate of CPI rose to 2.6% YoY from 2.4% YoY in September. The core rate remained steady at 3.3%. The detail of the report shows that the shelter index rose by 0.4% on the month, which accounted for 50% of the increase in all items on a monthly basis.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.