- The Indian rupee is on the back foot once again.
- A regulation change is behind the recent move.
- The technical picture has improved for USD/INR.
USD/INR is trading above 71 once again, extending its gains after nearly touching 70 on Wednesday. The Indian Rupee is coming under renewed pressure as India considers extending the compliance deadline for stricter rules regarding the import of steel for carmakers.
Easing regulation on imports implies additional imports and thus more spending in foreign currency. India is an importer of commodities.
The country faces elections in April, and the government led by PM Narendra Modi is trying to make life easier for voters. The Reserve Bank of India (RBI) recently surprised with a rate cut.
USD/INR Technical Analysis
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Dollar/rupee is now trading around 71.10. The recent move sent it not only above the 200-day Simple Moving Average but also above the 50-day one. Momentum remains negative but the Relative Strength Index is balanced.
The near-term resistance line is at 71.25, which was the recent high. 71.60 which was a high point in early January. The 2019 peak of 71.90 is next.
Looking down, 70.60 was a support line in late January and early February. 70.10 was the low point seen on Wednesday and the next significant support level is only 69.25 seen at the wake of the year.
More: RBI to cut rates by 25 basis points by mid-year - Reuters Poll
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