- Indian rupee is trading in negative lands in the early European session on Thursday.
- The demand for the US dollar at the end of the month withdraws the INR decrease, but an increase in foreign funds flows may determine its negative aspect.
- Investors are preparing for the unemployed demands in the United States and the final final GDP report for the fourth quarter, which is scheduled to be later on Thursday.
Indian rupee (INR) loses momentum on Thursday. Fears about possible tariffs and the high demand for US dollar (USD) from importers undermining the Indian currency. Moreover, the high crude oil prices contribute to the negative side of INR because India is the third largest oil consumer in the world.
However, positive expectations in local stocks and the flow of the renewed foreign fund may raise the local currency. Any significant decrease in INR may be dedicated due to the foreign exchange intervention of the Indian Reserve Bank (RBI). In the future, the unemployed demands will be published in the United States’ weekly, and the final GDP (GDP) for the fourth quarter (Q4), and the sales of hanging homes will be published later on Thursday.
Indian rupee is still weak in the global sermon
- Foreign investors have bought more than two billion dollars in Indian stocks in the past four days, while monthly flows to bonds have reached more than $ 3 billion.
- Late Wednesday, Trump signed an order to implement a 25 % tariff on car imports. Trump added that the definitions will enter into force on April 2 and that the United States will start collecting them after a day.
- Trump will allow the connection of up to one month for auto parts imports from the proposed car tariffs by 25 %, for each Reuters.
- The orders of permanent goods in the United States increased by 0.9 % in February, compared to an increase of 3.3 % (revised from 3.1 %) in January, according to the American Statistical Office on Wednesday. This number came better than the market expectation of a 1 % decrease.
The USD/Inr Look remains in the gameplay
Indian rupee weakens a day. The declining expectations of the dollar pair/inr remain intact, as the price remains covered with less than 100 days moving average on the daily time frame. The dumping momentum is strengthened by the 14 -day relative index (RSI), which stands without the midfield near 36.0, indicating that the lower resistance path is to the negative side.
The first support level of USD/INR appears at 85.56, the lowest level on March 26. The continuous declining pressure may witness a lower level a decrease to 84.84, the lowest level on December 19, followed by 84.22, the lowest level on November 25, 2024.
On the bright side, the pair’s key resistance level appears in the 85.95-86.00 area, which represents EMA for 100 days and the psychological level. To the north, the next obstacle to viewing is 86.48, the lowest level on February 21, on its way to 87.00, round shape.
RBI common questions
The role of the Indian Reserve Bank (RBI), with its own words, is “… to maintain the stability of prices taking into account the goal of growth.” This includes maintaining the inflation rate at 4 % stable in the first place using the interest rate tool. RBI also maintains the exchange rate at a level that will not cause excessive fluctuations and problems for exporters and importers, because the Indian economy relies heavily on foreign trade, especially oil.
RBI officially meets in six two -month bilateral meetings to discuss its monetary policy, and if necessary, adjust interest rates. When inflation is very high (4 % higher than its target), RBI usually raises interest rates to deter borrow and spending, which can support rupee (INR). If inflation is much lower than the target, RBI may reduce prices to encourage more lending, which can be negative for INR.
Due to the importance of trade in the economy, the Indian Reserve Bank (RBI) is actively interfering in the foreign currency markets to maintain the exchange rate within a limited range. It does this to ensure that the Indian importers and exporters are not exposed to unnecessary currency dangers during periods of foreign exchange fluctuations. He buys RBI and sells rupees in the immediate market at the main levels, and uses derivatives to surround their positions.
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