USD/INR stays above 71.00 as IMF blames India for downbeat growth forecasts

USD/INR takes the bids to 71.15 while heading into the European session on Tuesday. The pair recently benefited from the International Monetary Fund’s (IMF) latest growth forecast. Declines in Indian consumer sentiment also helped the pair to deviate from the previous day’s drop.

The IMF cites India as the largest contributor to the global headwinds that led the international institute to downwardly revise its growth forecasts. The Washington-based entity announced a 0.2% cut in the GDP forecast of the emerging market and developing economies from 3.7% in 2019 to 4.4% in 2020 and 4.6% in 2021. The organization also downsides India’s economic growth forecast to 4.8% from the 6.1% expansion it projected in October.

Also weighing on the Indian rupee (INR) could be the Thomson Reuters/Ipsos Index of Consumer Sentiment for January that nosedived 7.3%. This had negative impacts on the news that the government is planning to announce a law that will enable foreign investors to exclude tax demands.

The market’s risk tone remains heavy amid calls of China virus and Libyan commander’s rejection of the international push for peace. Traders might have ignored comments from China’s Commerce Ministry that they welcome competitive US products.

With this, the US 10-year treasury yields stay below 1.80% whereas the MSCI’s index of Asian-Pacific shares outside Japan dropping 1.3% to 702.60.

Investors will now focus on how the US traders will react to the weekend news as they return from the extended weekend. Also likely to affect the market’s risk tone will be US President Donald Trump’s impeachment hearing.

Technical Analysis

USD/INR prices are gradually moving towards 71.55 unless declining below the monthly low surrounding 70.58, which if broken could recall 70.00 to the charts.