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    • USD/INR maintains position near record highs, eyes on 16th BRICS summit
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    USD/INR maintains position near record highs, eyes on 16th BRICS summit

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    • The Indian rupee is grappling with an all-time low due to overseas selling of Indian equities.
    • Prime Minister Modi is expected to meet Chinese President Xi Jinping during the BRICS summit.
    • The Indian rupee could hold up if the RBI intervenes in the market by selling US dollars.

    The Indian rupee (INR) held steady against the US dollar (USD) on Tuesday, supported by the potential for market interventions from the Reserve Bank of India (RBI) that helped the INR stem equity outflows and dollar strength endure.

    However, continued foreign selling continues to put pressure on the INR, while concerns over the conflict in the Middle East are impacting risk-sensitive currencies. Foreign outflows from Indian equities are likely to continue as investors shift money from India to China, attracted by the recent stimulus measures and relatively lower valuations.

    Prime Minister Narendra Modi has left for Russia to participate in the 16th BRICS Summit in Kazan. During the visit, Modi will hold bilateral talks with Russian President Vladimir Putin. He is also expected to meet with Chinese President Xi Jinping and hold talks with leaders from the other BRICS member states.

    Daily Digest Market Movers: The Indian rupee faces downward pressure from foreign outflows

    • The US dollar (USD) gained support after a sharp rise in US Treasury yields, which rose more than 2% on Monday. This increase was fueled by signs of economic resilience and growing concerns about a possible revival of inflation in the United States, reinforcing expectations of tighter monetary policy.
    • According to the CME FedWatch Tool, the probability of a 25 basis point rate cut in November is 89.1%, with no larger 50 basis points cut expected.
    • Federal Reserve Bank of Minneapolis President Neel Kashkari emphasized Monday that the Fed is closely monitoring the U.S. labor market for signs of rapid destabilization. Kashkari warned investors to anticipate a gradual pace of rate cuts in coming quarters, suggesting any monetary easing will be moderate rather than aggressive.
    • Foreign institutional investors have sold about $10 billion worth of Indian equities so far in October, surpassing the previous record of $8.35 billion set in March 2020, according to a Reuters report.
    • The Reserve Bank of India in its October bulletin said that overall demand in India is expected to recover from the temporary slowdown observed in the second quarter, due to a surge in festive demand and a rise in consumer confidence.

    Technical Analysis: USD/INR remains above 84.00, close to all-time highs

    The USD/INR pair is trading around 84.10 on Tuesday. An analysis of the daily chart indicates that the pair is consolidating within a rising channel pattern, indicating a bullish bias. The 14-day Relative Strength Index (RSI) remains above the 50 level, further confirming the prevailing bullish momentum.

    In terms of resistance, the USD/INR pair may face a hurdle at its all-time high at 84.14 reached on August 5, followed by the upper limit of the ascending channel at the 84.20 level.

    On the downside, immediate support appears on the nine-day Exponential Moving Average (EMA) around the 84.01 level, which corresponds to the lower boundary of the ascending channel near the psychological level of 84.00.

    USD/INR: daily chart

    PRICE in US dollars today

    The table below shows the percentage change of the US dollar (USD) against the major quoted currencies today. The US dollar was strongest against the Canadian dollar.

    USD € GBP JPY CAD AUD NZD CHF
    USD -0.11% -0.18% -0.03% -0.02% -0.42% -0.40% -0.15%
    € 0.11% -0.06% 0.10% 0.07% -0.34% -0.28% -0.04%
    GBP 0.18% 0.06% 0.16% 0.15% -0.27% -0.23% 0.02%
    JPY 0.03% -0.10% -0.16% -0.00% -0.40% -0.40% -0.13%
    CAD 0.02% -0.07% -0.15% 0.00% -0.39% -0.38% -0.13%
    AUD 0.42% 0.34% 0.27% 0.40% 0.39% 0.02% 0.27%
    NZD 0.40% 0.28% 0.23% 0.40% 0.38% -0.02% 0.25%
    CHF 0.15% 0.04% -0.02% 0.13% 0.13% -0.27% -0.25%

    The heatmap shows percentage changes of the major currencies against each other. The base currency is chosen from the left column, while the quote currency is chosen from the top row. For example, if you choose the US dollar from the left column and move along the horizontal line to the Japanese yen, the percentage change shown in the box will represent USD (base)/JPY (quote).

    Frequently Asked Questions about RBI

    The role of the Reserve Bank of India (RBI) is, in its own words, “to maintain price stability while keeping in mind the objective of growth.” This involves keeping inflation at a stable level of 4%, mainly using the tool of interest rates. The RBI also keeps the exchange rate at a level that will not cause excessive volatility and problems for exporters and importers as the Indian economy is highly dependent on interest rates. foreign trade, especially oil.

    The RBI formally meets six times a year to discuss its monetary policy and, if necessary, adjust interest rates. When inflation is too high (above the 4% target), the RBI will normally raise interest rates to deter borrowing and spending, which can support the rupee (INR). If inflation falls too far below target, the RBI could cut rates to encourage more lending, which could be negative for the INR.

    Due to the importance of trade to the economy, the Reserve Bank of India (RBI) actively intervenes in the foreign exchange markets to keep the exchange rate within a narrow range. This is done to ensure that Indian importers and exporters are not exposed to unnecessary currency risk during periods of currency volatility. The RBI buys and sells rupees in the spot market at key levels and uses derivatives to hedge its positions.

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