The Indian Rupee (INR) slumps against the US Dollar (USD) at the start of the week. The USD/INR pair rises to near 88.20 even as hopes of a trade deal between the United States (US) and India have increased.
A Bloomberg report on Friday showed that an Indian government official said that negotiators from both nations have resolved almost all issues and are in the final stage of discussing the legal language of the trade pact. “There has been convergence on most issues, and a deal is in sight,” the official said on condition of anonymity.
Meanwhile, Indian Commerce and Industry Minister Piyush Goyal stated in an event in Germany on Friday that New Delhi won’t deal in a rush. “We don’t do deals in a hurry, and we don’t do deals with deadlines, with a gun on our head,” Goyal said.
Trade relations between the US and India have been under stress for a few months since President Donald Trump raised tariffs on imports from New Delhi to 50%, criticizing India for buying Oil from Russia.
Meanwhile, signs of a slowdown in the outflow of foreign funds from the Indian stock market could support the Indian Rupee going forward. So far this month, Foreign Institutional Investors (FIIs) have sold shares worth Rs. 244.02 crores, against an average selling of Rs. 43,290.32 crores seen in the last three months.
The table below shows the percentage change of Indian Rupee (INR) against listed major currencies today. Indian Rupee was the weakest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | INR | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.01% | -0.15% | 0.11% | -0.15% | -0.46% | 0.26% | 0.04% | |
| EUR | 0.00% | -0.11% | 0.12% | -0.12% | -0.42% | 0.00% | 0.10% | |
| GBP | 0.15% | 0.11% | 0.22% | -0.01% | -0.30% | 0.39% | 0.20% | |
| JPY | -0.11% | -0.12% | -0.22% | -0.26% | -0.59% | -0.31% | -0.06% | |
| CAD | 0.15% | 0.12% | 0.00% | 0.26% | -0.31% | -0.08% | 0.22% | |
| AUD | 0.46% | 0.42% | 0.30% | 0.59% | 0.31% | 0.22% | 0.52% | |
| INR | -0.26% | 0.00% | -0.39% | 0.31% | 0.08% | -0.22% | 0.00% | |
| CHF | -0.04% | -0.10% | -0.20% | 0.06% | -0.22% | -0.52% | 0.00% |
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 Indian Rupee from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent INR (base)/USD (quote).
Daily digest market movers: US Dollar holds ground on US-China trade deal optimism
- The Indian Rupee struggles to outperform the US Dollar even as the latter trades flat in the opening trade on Monday. During the Asian session, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades flat near 99.00.
- The US Dollar flattens as the impact of the softer-than-expected US Consumer Price Index (CPI) data for September, released on Friday, has been offset by receding trade tensions between the US and China.
- The US CPI report showed that the headline and the core inflation – which excludes volatile food and energy items – rose at a moderate pace of 0.3% and 0.2% on a monthly basis. On year, the headline CPI grew by 3%, slower than estimates of 3.1% but faster than the prior reading of 2.9%. In the same period, the core CPI decelerated to 3% from expectations and the previous release of 3.1%.
- Soft US inflation data has given room to the Federal Reserve (Fed) to focus more on supporting slower job growth. Meanwhile, traders are increasingly confident that the Fed will cut interest rates by 25 basis points (bps) in the monetary policy announcement on Wednesday, according to the CME FedWatch tool.
- Meanwhile, easing US-China trade frictions have offered some relief to the US Dollar. US Treasury Secretary Scott Bessent has expressed confidence that 100% additional tariff threats by Washington on Beijing and rare earth export controls by them would be deferred, after meeting with Chinese Premier He Lifeng at the sidelines of the Association of Southeast Asian Nations (ASEAN) summit in Malaysia over the weekend.
- “No, I’m not, and I’m also anticipating that we will get some kind of a deferral on the rare earth export controls that the Chinese had discussed,” Bessent said in an interview with NBC’s “Meet the Press” program after he was asked whether the White House would proceed with 100% additional tariffs on China.
Technical Analysis: USD/INR stays below 20-day EMA
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The USD/INR pair rises to near 88.10 at the start of the week. However, the near-term trend of the pair remains bearish as the 20-day Exponential Moving Average (EMA) slopes downwards around 88.12.
The 14-day Relative Strength Index (RSI) wobbles around 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 September 23 low around 88.48 will be a key barrier.
Economic Indicator
Consumer Price Index (YoY)
Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as The Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The YoY reading compares the prices of goods in the reference month to the same month a year earlier.The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.
The US Federal Reserve (Fed) has a dual mandate of maintaining price stability and maximum employment. According to such mandate, inflation should be at around 2% YoY and has become the weakest pillar of the central bank’s directive ever since the world suffered a pandemic, which extends to these days. Price pressures keep rising amid supply-chain issues and bottlenecks, with the Consumer Price Index (CPI) hanging at multi-decade highs. The Fed has already taken measures to tame inflation and is expected to maintain an aggressive stance in the foreseeable future.
