USD/INR gains as Greenback rises, US CPI comes into focus
- The Indian Rupee faces slight selling pressure against the US Dollar as the latter rebounds from a corrective move.
- Washington threatens to block software-powered exports to Beijing ahead of the Bessent-He meeting.
- The US could reduce tariffs on imports from India to 15%-16%, Mint reported.
The Indian Rupee (INR) trades lower against the US Dollar (USD) on Thursday after two holidays in Indian markets. The USD/INR rises to near 88.10 as the US Dollar rebounds after a slight corrective move on Wednesday, despite renewed trade tensions between the United States (US) and China.
During afternoon trading hours in India, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.15% higher to near 99.00.
The uncertainty over US-China trade relations escalated after a report from Reuters stated that the White House is planning to curb the export of “any and all critical software” starting November 1. This comes at a time when US Treasury Secretary Scott Bessent and China Vice Premier He Lifeng are scheduled to meet this weekend in Malaysia to discuss various issues, including recently announced export controls on rare earth minerals by Beijing and additional 100% tariffs by Washington.
Later this month, US President Donald Trump and Chinese leader Xi Jinping are also scheduled to meet in South Korea. Lately, Trump has expressed confidence that both nations will reach a trade agreement during the meeting.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | INR | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.09% | 0.07% | 0.34% | -0.00% | -0.25% | 0.18% | 0.15% | |
| EUR | -0.09% | -0.03% | 0.25% | -0.10% | -0.33% | 0.09% | 0.06% | |
| GBP | -0.07% | 0.03% | 0.28% | -0.06% | -0.30% | 0.13% | 0.09% | |
| JPY | -0.34% | -0.25% | -0.28% | -0.36% | -0.58% | -0.14% | -0.18% | |
| CAD | 0.00% | 0.10% | 0.06% | 0.36% | -0.23% | 0.19% | 0.15% | |
| AUD | 0.25% | 0.33% | 0.30% | 0.58% | 0.23% | 0.42% | 0.39% | |
| INR | -0.18% | -0.09% | -0.13% | 0.14% | -0.19% | -0.42% | -0.04% | |
| CHF | -0.15% | -0.06% | -0.09% | 0.18% | -0.15% | -0.39% | 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 US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Daily digest market movers: FIIs turn out to be buyers in Indian equity market so far in October
- The Indian Rupee ticks down against the US Dollar, even as a report from Mint has stated that the US and India are close to reaching a trade deal. The report also showed that Washington will reduce duty on imports from New Delhi to 15%-16% from 50%. Mint also stated that India will gradually scale back its import of seaborne crude Oil from Russia, which remained a major reason for trade tensions between the nations.
- The scenario of the US-India reaching a trade deal would be favorable for the Indian Rupee, which had been underperforming its peers due to trade frictions.
- Meanwhile, the Foreign Institutional Investors (FIIs) trading data have shown that funds from overseas investors are gradually returning to Indian stock markets after a massive outflow in the July-September period. FIIs have been net buyers over the last five trading days, pumping Rs. 2,262.08 crores into the Indian equity market. So far in October, FIIs have purchased Indian shares worth Rs. 300.41 crores.
- The gradual return of foreign funds into Indian markets suggests that overseas investors are not significantly bearish on the equity market outlook. Meanwhile, Indian bourses have also opened on a positive note after two holidays. Nifty 50 has jumped 0.8% to near 26,080, the highest level seen in a year. A strong upside move in the benchmark index is mainly contributed by technology stocks.
- In the US, investors await the delayed Consumer Price Index (CPI) data for September, which is scheduled for release on Friday. The inflation data has been delayed due to the ongoing US government shutdown. The data will significantly influence market expectations for the Federal Reserve’s (Fed) monetary policy outlook.
- Economists expect the US headline inflation to have risen at a faster pace of 3.1% on an annualized basis, up from the prior release of 2.9%, with core figures growing steadily by 3.1%.
- Ahead of the US inflation data, the CME FedWatch tool indicates that traders are confident the Fed will reduce interest rates again by 25 basis points (bps) at the policy meeting later this month.
Technical Analysis: USD/INR stays under pressure near 50-day EMA
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USD/INR edges higher to near 88.05 at open on Thursday. The 50-day Exponential Moving Average (EMA) near 88.13 is acting as a key barrier for the USD/INR bulls.
The 14-day Relative Strength Index (RSI) wobbles near 40.00. A fresh bearish momentum would emerge if the RSI falls below that level.
Looking down, the August 21 low of 87.07 will act as key support for the pair. On the upside, the 20-day EMA will be a key barrier.
Indian economy FAQs
The Indian economy has averaged a growth rate of 6.13% between 2006 and 2023, which makes it one of the fastest growing in the world. India’s high growth has attracted a lot of foreign investment. This includes Foreign Direct Investment (FDI) into physical projects and Foreign Indirect Investment (FII) by foreign funds into Indian financial markets. The greater the level of investment, the higher the demand for the Rupee (INR). Fluctuations in Dollar-demand from Indian importers also impact INR.
India has to import a great deal of its Oil and gasoline so the price of Oil can have a direct impact on the Rupee. Oil is mostly traded in US Dollars (USD) on international markets so if the price of Oil rises, aggregate demand for USD increases and Indian importers have to sell more Rupees to meet that demand, which is depreciative for the Rupee.
Inflation has a complex effect on the Rupee. Ultimately it indicates an increase in money supply which reduces the Rupee’s overall value. Yet if it rises above the Reserve Bank of India’s (RBI) 4% target, the RBI will raise interest rates to bring it down by reducing credit. Higher interest rates, especially real rates (the difference between interest rates and inflation) strengthen the Rupee. They make India a more profitable place for international investors to park their money. A fall in inflation can be supportive of the Rupee. At the same time lower interest rates can have a depreciatory effect on the Rupee.
India has run a trade deficit for most of its recent history, indicating its imports outweigh its exports. Since the majority of international trade takes place in US Dollars, there are times – due to seasonal demand or order glut – where the high volume of imports leads to significant US Dollar- demand. During these periods the Rupee can weaken as it is heavily sold to meet the demand for Dollars. When markets experience increased volatility, the demand for US Dollars can also shoot up with a similarly negative effect on the Rupee.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
