Earlier this year, the US dollar (USD) rose to a record high of 83.44 against the Indian rupee (INR). Fueled by a combination of factors, including a fall in oil prices and forceful statements from the Federal Reserve, the dollar significantly strengthened its position.
Although the rupee has now regained some ground, it remains significantly weaker against the US dollar than it was a year ago.
What’s new on USD/INR?
On Monday, November 13, the rupee closed almost unchanged against the dollar as traders avoided taking large positions in a holiday week as they expected the Reserve Bank of India (RBI) to intervene to curb any volatility in the local currency to prevent.
Thus, the USD/INR pair closed at 83.33 compared to the previous close of 83.34. The rupee moved in a narrow range of just 4 paise during Monday’s session.
USD/INR 1-day chart. Source: Google
On Friday, November 10, the rupee fell to a low of 83.42 following a technical system failure. According to traders, the Indian central bank has stepped in to support the INR.
Market participants are on alert as they await the latest US inflation report, due to be released on Tuesday. Consumer Price Index (CPI) data will provide further guidance to traders as India’s financial markets remain closed for a national holiday on the same day.
Economists expect overall U.S. prices to rose 0.1% in October from the previous month, driven by lower energy prices. At the same time, the core consumer price index (CPI) is forecast to rise 0.3% month-on-month and 4.1% year-on-year.
Analyst opinions on USD/INR
State-owned banks made dollars available in the spot market on Monday, but traders argued it was difficult to determine whether this was for their customers or for the RBI.
“Since October, the rupee has remained in the zone of record low volatility – the central bank’s main target.”
said Dilip Parmar, a foreign exchange (forex) analyst at HDFC Securities.
However, the INR could continue to trade in the 83.00-83.60 range as long as volatility remains low and the window remains open for banks to take new positions, Parmar said.
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Source : finbold.com