- Analytics
- News and Tools
- Market News
- USD/INR extends its downward move ahead of Indian WPI Inflation data
USD/INR extends its downward move ahead of Indian WPI Inflation data
- Indian Rupee holds positive ground on the softer USD.
- India’s retail inflation came in at 5.69% in December vs. 5.55% prior, weaker than the 5.87% expected.
- Investors will closely monitor the Indian Wholesale Price Index (WPI) inflation report, due on Monday.
Indian Rupee (INR) kicks off the new week on a positive note on Monday amid the US Dollar (USD) weakness. The Ministry of Statistics and Programme Implementation revealed on Friday that India’s retail inflation hit a four-month high of 5.69% in December from 5.55% in November, weaker than the market expectation of 5.87%. While headline retail inflation rose again in December and now spent 51 consecutive months above the Reserve Bank of India's (RBI) medium-term target of 4%, it continues to remain close to the Reserve Bank of India's (RBI) tolerance range of 2–6%.
The India Wholesale Price Index (WPI) Inflation report will be in the spotlight on Monday. Furthermore, the Indian WPI Fuel, WPI Food, and Trade Balance data will be released later in the day. Risk sentiment is likely to remain the key driver behind the USD/INR’s price action in the absence of US top-tier economic data due to the Martin Luther King Jr.'s Birthday bank holiday
Daily Digest Market Movers: Indian Rupee’s upside might be limited amid the ongoing tensions in the Red Sea
- According to the PHD Research Bureau, India's economy will grow to over USD 4 trillion in the next two years, with a stabilized inflation rate of 4.5%.
- Houthi attacks on commercial ships in the Red Sea would negatively impact oil-importing countries, including India, said the World Economic Forum (WEF) president Borge Brende.
- The US Producer Price Index (PPI) for December rose by 1.0% YoY from the revised 0.8% increase in November, below the market consensus of 1.3%.
- The annual core PPI, which excludes volatile food and energy prices, climbed by 1.8% in December from 2.0% in the previous reading and weaker than the expectation of 1.9%. The monthly core PPI remained unchanged for the third consecutive month.
- According to the CME FedWatch Tool, investors are pricing in 74.2% odds of a rate cut in March, up from 70% last week.
Technical Analysis: Indian Rupee’s outlook remains weak in the shorter term
Indian Rupee trades strongly on the day. The USD/INR pair has remained stuck within the 82.80-83.40 trading range since September 2023. Technically, USD/INR exhibits a bearish vibe as the pair holds below the key 100-period Exponential Moving Average (EMA) on the daily chart. The negative outlook is supported by the 14-day Relative Strength Index (RSI) which is below the 50.0 midpoint, suggesting the path of least resistance is to the downside.
A breach of the key support level of 82.80, the lower limit of the trading range and a low of September 12, will see a drop to a low of August 11 at 82.60. The next contention level is seen near a low of August 24 at 82.40. On the upside, the support-turned-resistance at 83.00 acts as an immediate upside barrier for USD/INR. Further north, the upper boundary of the trading range at 83.40 will be the additional upside filter to watch, followed by the psychological figure at 84.00.
US Dollar price today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Euro.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.04% | 0.00% | -0.03% | 0.03% | -0.03% | 0.06% | 0.01% | |
| EUR | 0.06% | 0.03% | -0.01% | 0.06% | 0.01% | 0.10% | 0.05% | |
| GBP | -0.01% | -0.03% | -0.04% | 0.02% | -0.02% | 0.07% | 0.02% | |
| CAD | 0.05% | 0.00% | 0.05% | 0.06% | 0.00% | 0.10% | 0.06% | |
| AUD | -0.03% | -0.06% | 0.00% | -0.05% | -0.03% | 0.05% | 0.01% | |
| JPY | 0.04% | -0.04% | -0.11% | -0.01% | 0.06% | 0.09% | 0.04% | |
| NZD | -0.06% | -0.13% | -0.07% | -0.11% | -0.05% | -0.09% | -0.05% | |
| CHF | 0.00% | -0.06% | -0.02% | -0.06% | 0.01% | -0.05% | 0.04% |
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.
© 2000-2024. All rights reserved.
This site is managed by Teletrade D.J. LLC 2351 LLC 2022 (Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines).
The information on this website is for informational purposes only and does not constitute any investment advice.
The company does not serve or provide services to customers who are residents of the US, Canada, Iran, The Democratic People's Republic of Korea, Yemen and FATF blacklisted countries.
Making transactions on financial markets with marginal financial instruments opens up wide possibilities and allows investors who are willing to take risks to earn high profits, carrying a potentially high risk of losses at the same time. Therefore you should responsibly approach the issue of choosing the appropriate investment strategy, taking the available resources into account, before starting trading.
Use of the information: full or partial use of materials from this website must always be referenced to TeleTrade as the source of information. Use of the materials on the Internet must be accompanied by a hyperlink to teletrade.org. Automatic import of materials and information from this website is prohibited.
Please contact our PR department if you have any questions or need assistance at pr@teletrade.global.
Bank transfers
