The Indian rupee had a relatively better month in September than other developed and emerging market currencies. USD/INR dropped by 0.4% even as the US dollar index surged to the highest level in more than 20 years. It was trading at 79.65 on Monday morning, which was about 83 basis points above the lowest level in September.
The USD/INR has been in a bullish this year as it has risen by more than 7.47% since January. In this period, rupee has outperformed other currencies, including the Chinese yuan, British pound, euro, and the Japanese yen.
This performance is mostly due to the relatively strong performance of the Indian economy. Unlike other countries, India has continued to do trade with Russia, a country that has become a pariah on the world stage. It has continued to benefit from the discounts offered by the country. As a result, many of its companies like Adani Group and Reliance Industries have done well, pushing Gautami Adani’s net worth up by over $50 billion this year.
The USD/INR moved sideways after the decision by the Reserve Bank of India (RBI) to deliver its fourth interest rate hike. It boosted the repo rate by 0.50% and pushed the headline rate hike up to 5.90%. This means that it has hiked rates by 190 basis points this year, much lower than the Federal Reserve’s 300 basis points.
The next key catalyst for the USD/INR price will be the upcoming American jobs data scheduled for Friday this week. These numbers will likely show that the labor market in the country continued doing well in September.
The USD to INR exchange rate has been in a consolidation phase after it hit the year-to-date high of 80.12 this month. It remains slightly above the 25-day and 50-day moving averages while the MACD has formed a bearish divergence pattern. The pair also seems like it has formed a double-top pattern whose neckline is at 78.15.
Therefore, the pair will likely retreat slightly in October. If this happens, it will likely retest the support at 78. However, a clear break above 80 will invalidate the double-top pattern and point to more gains.
This post was last modified on %s = human-readable time difference 07:52