The USD/INR produced a remarkable reversal lower in the month of March, and the currency pair is now within values seen in late December, which raises important questions about direction in April.
The USD/INR has moved lower in March. The month’s trading action began near the 87.46000 vicinity and by the end of the second week was below the 87.0000 mark. Lows this morning have taken the USD/INR to the 85.4500 vicinity. An expressed change to interest rate policy has certainly helped the USD/INR become bearish. The Indian government has noted that inflation is showing signs of slight erosion and the Reserve Bank of India has said it intends on cutting interest rates more during this calendar year.
The ability of the USD/INR to move from highs seen the first week of February from nearly 88.0000 to the current price level as the month of April gets set to begin is noteworthy. The notion that the Reserve Bank of India purchased a large amount of Indian Rupees has also been heard frequently via whispers about intervention. The USD/INR is now near values seen in late December. The currency pair was around 84.2000 in the immediate aftermath of the U.S election on the 6th of November.
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India Central Bank Policy and Government Impetus
The Reserve Bank of India has warned its citizens in the past not to speculate on the Indian Rupee. The central bank maintains this stance, and enforces the rule by not allowing Forex trading for speculators via brokerage platforms in India. The government appears to have a valid point regarding the desire to protect its citizens from fluctuations in the USD/INR. The currency pair had been within a long-term bullish cycle until it began reversing lower in February.
The ability of the USD/INR to move lower and now test values seen in late December brings into question what direction the currency pair will now undertake. After demonstrating the ability to move lower, is the India government happy with the current values or does it believe additional changes to the exchange rate need to take place? The USD/INR moves in a manner that is heavily influenced by the Reserve Bank of India and this is not about to change. The reasons why policy is changing and what the outlook based on needs are - is what financial institutions should be considering.
Modi and Trump Friendship and Tariff Negotiations
It is apparent that Prime Minister Modi and President Trump have an outward friendship based on mutual respect. The U.S White House has spoken about India and the need for some trading policy changes, but the two nations seem to be working in unison to make sure there is not an open rupture to its working relationship.
- Both Modi and Trump are seen as solid negotiators by financial institutions.
- The move lower in the USD/INR while technically rather demonstrative, is actually in line with a lot of the USD centric weakness seen in recent weeks in the broad Forex market.
- The notion that tariff rhetoric this coming week will get loud should be taken into consideration by USD/INR traders, but remembering that the Reserve Bank of India holds many of the cards is important too.
USD/INR Outlook for April 2025
Speculative price range for USD/INR is 84.9000 to 86.0000
The move lower in the USD/INR may have taken many speculators by surprise. The power of the move lower was significant and now the 85.5000 to 85.6000 level will be looked at as important near-term resistance psychologically perhaps. The power of the Reserve Bank of India to create momentum lower since February, and create greater velocity in March should be taken seriously.
The government of India now needs to be watched to see if they believe the USD/INR has reached a comfortable equilibrium taking into consideration the prospect of a changing economic environment via trade with the U.S in the mid-term. Traders of the USD/INR should be cautious in the coming days and weeks. If the USD/INR moves lower during the month of April it will be noteworthy and worth contemplating in relationship to the broad Forex market. Conservative leverage is called for when wagering on the USD/INR.
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