Volatility Seen as Questions Surround Policy Change
- The month of March will see the USD/INR begin trading near its highest values once again, following in the footsteps of a quicker bullish run upwards which began in late November.
- The upwards momentum in the USD/INR needs to be watched. The currency pair is proving a rather intriguing barometer via the India government and the Reserve Bank of India as they try to create a working economic correlation to the Trump White House and its implications.
- The Reserve Bank of India maintains its power over monetary policy and by allowing the Indian Rupee to lose value consistently the past few months indicates they might be trying mitigate the potential effects of tariff influences.
- The USD/INR will start trading tomorrow near the 87.4470, unless a major gap is seen via a direct affect on Monday’s opening.
- Day traders should note the USD/INR was near the 86.7000 vicinity on last Monday the 24th of February. And the Friday before on the 21st the USD/INR was within the 86.4000’s range. Upwards momentum began in earnest on Tuesday of last week once again however.
USD/INR and Outside Influences and Internal Reactions
The USD/INR was trading near the 86.5000 realm late on Friday the 31st of January, by February the 10th the currency pair had spiked and was a hair under the 88.0000 level. What happened was a reaction to President Trump’s tariff stance in early February on the 3rd and immediate reaction in Forex including the USD/INR. While there may be no way to prove the following, it may be wise to consider the Reserve Bank of India is using volatile days upwards as a way to allow the USD/INR to continue its often incremental run higher.
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The USD/INR has been within a long term bullish run higher, but often it is managed via incremental steps upwards which often look polite. The potential of allowing outside noisy days to let the USD/INR run higher may allow the Indian government to point the finger at the outside influences and say there is nothing they can do regarding the turbulence. The higher values established in the USD/INR are rather intriguing regarding velocity and noise from afar. A cheaper Indian Rupee for businesses abroad allows for greater export from India.
USD/INR Higher Again Last Week
After a move lower from the 11th until the 24th of February, the USD/INR was able to trade in a rather stable ‘lower realm’ between 87.0000 and 86.5000, but curiously these values largely stayed above the highest values seen in January.
- The move higher which started seeing momentum grow this past Tuesday and last into this weekend, now has the USD/INR once again looking at upper price ratios and traders should be prepared to see stickiness develop again in the higher elements.
- The thought that the Reserve Bank of India will keep talk of tariffs this week as an excuse for allowing the USD/INR to traverse slightly higher elements is not farfetched.
- While there was talk about intervention from the Reserve Bank of India in February trying to keep the value of the Indian Rupee stronger, and thus lowering the USD/INR price range, this has not had much effect in the wake of global influences.
USD/INR Outlook for March 2024
Speculative price range for USD/INR is 86.8500 to 88.1000
Forex is never easy. The USD/INR is at the forefront of central bank controls combing with the prospects of global economic policy – and U.S influences. The Reserve Bank of India likely finds itself in a complicated position. On one hand they want to make sure there is an appearance of trying to protect the Indian Rupee, on the other hand they must prepare the groundwork for the potential of changes in trade agreements between the U.S and India.
The bullish trend in the USD/INR remains an intriguing barometer and one that should be treated by respect by anyone who feels the urge to look for lower speculative values – bias in a currency often proves expensive. The notion that nervous conditions globally are making financial institutions lean into the idea that cause and effect remains important in outlook is clear, the belief the USD/INR bullish trend will continue is likely the favored approach. Certainly there will be reversals lower on occasion, but velocity upwards remains the critical concern.
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