- Indian Rupee struggles to gain on the stronger USD.
- The Reserve Bank of India (RBI) Governor highlighted the optimistic view for the Indian economy.
- Investors will closely monitor the Federal Open Market Committee (FOMC) policy meeting on Wednesday.
Indian Rupee ticks lower on Wednesday on the renewed US Dollar (USD) demand. That being said, the higher-for-longer US interest rate narrative has lifted US Treasury bond yields to multi-year highs, which acts as a tailwind for the pair. Elevated geopolitical risks in the Middle East might also lead to higher oil prices and impact Indian importers.
Nonetheless, the Reserve Bank of India (RBI) Governor Shaktikanta Das said Tuesday that India’s growth momentum remains robust and the Gross Domestic Product (GDP) in the second quarter of Fiscal Year 2024 is expected to surprise on the upside. Das further stated that geopolitical risks are the biggest challenge to growth. However, he is confident that India is in a better position compared to other countries to deal with potentially risky situations.
Market participants will closely monitor the Federal Open Market Committee (FOMC) policy meeting, with no change in rates expected. However, a hawkish stance during the press conference might trigger volatility in the Indian market. Later this week, the spotlight will shift to US Nonfarm Payrolls on Friday.
Daily Digest Market Movers: Indian Rupee maintains a bearish vibe amid multiple challenges
- Reserve Bank of India (RBI) Governor Shaktikanta Das said GDP growth for the second quarter of FY24 will exceed expectations.
- RBI Governor Das said geopolitical risks are the biggest challenge, but India is better placed compared to other countries to deal with any potentially risky situation.
- Overseas investors sold $2.74 billion in Indian equities in October, marking the largest monthly sell-off since January.
- According to the RBI, India's foreign currency reserves fell by $2.36 billion to $583.53 billion in the week ending October 20.
- RBI will maintain watch over inflation to ensure that it remains within the 4% target.
- The International Monetary Fund (IMF) raised its projected growth rate for India to 6.3% in October.
- The US S&P/Case-Shiller Home Price Indices for August improved to 2.2% YoY versus 0.2% prior, better than the expectation of 1.6%.
- The US Core Personal Consumption Expenditure Index (PCE) for September arrived at 3.7% YoY from the previous reading of 3.8%, and the headline PCE arrived at 3.4% YoY versus the estimation of 3.4%.
Technical Analysis: Indian Rupee keeps a bearish stance in a familiar range
The Indian Rupee trades with mild losses on the day. The USD/INR pair trades within a familiar range of 83.00–83.35. However, the technical outlook suggests that the bullish bias stays intact as the pair holds above the 100- and 200-day Exponential Moving Averages (EMA) on the daily chart.
The key resistance level will emerge at the upper boundary of the trading range of 83.35. A decisive break above the latter will see a rally to year-to-date (YTD) highs of 83.45. The additional upside filter to watch is a psychological round figure at 84.00. On the other hand, the confluence of a low of October 20 and a round mark at 83.00 acts as a critical contention level. Any follow-through selling below 83.00 will pave the way to a low of September 12 at 82.82, followed by a low of August 4 at 82.65.
US Dollar price in the last 7 days
The table below shows the percentage change of US Dollar (USD) against listed major currencies in the last 7 days. US Dollar was the strongest against the Swiss Franc.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.23% | 0.18% | 0.96% | 0.37% | 0.93% | 0.57% | 1.78% | |
| EUR | -0.23% | -0.06% | 0.74% | 0.15% | 0.72% | 0.35% | 1.55% | |
| GBP | -0.17% | 0.05% | 0.80% | 0.20% | 0.76% | 0.38% | 1.60% | |
| CAD | -0.98% | -0.74% | -0.80% | -0.59% | -0.04% | -0.40% | 0.82% | |
| AUD | -0.37% | -0.14% | -0.20% | 0.60% | 0.57% | 0.19% | 1.41% | |
| JPY | -0.94% | -0.70% | -0.76% | 0.01% | -0.57% | -0.35% | 0.86% | |
| NZD | -0.55% | -0.35% | -0.38% | 0.42% | -0.20% | 0.36% | 1.23% | |
| CHF | -1.81% | -1.57% | -1.63% | -0.82% | -1.44% | -0.86% | -1.24% |
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).
Indian Rupee FAQs
What are the key factors driving the Indian Rupee?
The Indian Rupee (INR) is one of the most sensitive currencies to external factors. The price of Crude Oil (the country is highly dependent on imported Oil), the value of the US Dollar – most trade is conducted in USD – and the level of foreign investment, are all influential. Direct intervention by the Reserve Bank of India (RBI) in FX markets to keep the exchange rate stable, as well as the level of interest rates set by the RBI, are further major influencing factors on the Rupee.
How do the decisions of the Reserve Bank of India impact the Indian Rupee?
The Reserve Bank of India (RBI) actively intervenes in forex markets to maintain a stable exchange rate, to help facilitate trade. In addition, the RBI tries to maintain the inflation rate at its 4% target by adjusting interest rates. Higher interest rates usually strengthen the Rupee. This is due to the role of the ‘carry trade’ in which investors borrow in countries with lower interest rates so as to place their money in countries’ offering relatively higher interest rates and profit from the difference.
What macroeconomic factors influence the value of the Indian Rupee?
Macroeconomic factors that influence the value of the Rupee include inflation, interest rates, the economic growth rate (GDP), the balance of trade, and inflows from foreign investment. A higher growth rate can lead to more overseas investment, pushing up demand for the Rupee. A less negative balance of trade will eventually lead to a stronger Rupee. Higher interest rates, especially real rates (interest rates less inflation) are also positive for the Rupee. A risk-on environment can lead to greater inflows of Foreign Direct and Indirect Investment (FDI and FII), which also benefit the Rupee.
How does inflation impact the Indian Rupee?
Higher inflation, particularly, if it is comparatively higher than India’s peers, is generally negative for the currency as it reflects devaluation through oversupply. Inflation also increases the cost of exports, leading to more Rupees being sold to purchase foreign imports, which is Rupee-negative. At the same time, higher inflation usually leads to the Reserve Bank of India (RBI) raising interest rates and this can be positive for the Rupee, due to increased demand from international investors. The opposite effect is true of lower inflation.
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 holds near 1.1100, looks to post small weekly gains
EUR/USD trades near 1.1100 in the American session on Friday. Although the risk-averse market atmosphere caps the pair's upside, dovish comments from Fed officials and the disappointing US jobs report help it hold its ground.
GBP/USD retreats to 1.3150 area after post-NFP spike
GBP/USD turns south and declines to 1.3150 area after spiking to 1.3240 in the early American session. The negative shift seen in risk mood following the US labor market data for August helps the US Dollar stay resilient against its peers and weighs on the pair.
Gold pulls away from near record highs, holds above $2,500
Gold came within a touching distance of a new all-time high near $2,530 as US Treasury bond yields turned south on disappointing US jobs data. The US Dollar's resilience amid a souring risk mood, however, caused XAU/USD to erase its daily gains.
Crypto today: Bitcoin, Ethereum, XRP tests key support, TRON network non-stablecoin activity hits new highs
Bitcoin, Ethereum, and XRP hover around key support levels after registering a steep correction earlier this week. TRON network’s stablecoin activity hit new highs following the release of SunPump.
Nonfarm Payrolls expected to show modest hiring rebound in August after July’s tepid report
The Nonfarm Payrolls report is forecast to show that the US economy added 160,000 jobs in August, after creating 114,000 in July. The Unemployment Rate is likely to dip to 4.2% in the same period from July’s 4.3% reading.
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.