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Since October 2022, the USDINR currency pair has exhibited a notable compression in its trading range, with a significant resistance level observed around 83. This range-bound movement has attracted the attention of market participants, and it appears that the Central Bank has been closely monitoring this situation. As of the most recent data, the USDINR price stands at 82.84, having broken through the trading range’s upper limit. The upcoming Reserve Bank of India (RBI) monetary policy announcement on August 10th is eagerly anticipated by investors, adding an additional layer of significance to this breakout.
The breach of the stiff resistance level at 83 marks a significant development in the USDINR’s price action.
A breakout from a long-standing range often has a psychological impact on traders and investors. It can attract fresh attention to the currency pair, leading to increased trading volumes and volatility.
The Indian economy is sensitive to changes in crude oil prices due to its significant reliance on oil imports. An increase in crude oil prices can negatively impact the country’s trade balance and external position, influencing the rupee’s value.
The upcoming RBI monetary policy announcement scheduled for August 10th has garnered considerable attention among market participants. The central bank’s decisions can significantly influence the USDINR exchange rate, and two key factors are expected to be closely scrutinized:
- Interest Rates: The stance on interest rates will be of utmost importance. A hawkish stance, indicating potential rate hikes in the future, can lead to a stronger rupee as higher rates attract foreign capital seeking better returns.
- Inflation Forecast: Given the recent uptick in global commodity prices, particularly crude oil, the RBI’s inflation forecast will be closely watched. Inflationary pressures could impact the central bank’s policy decisions and consequently influence the rupee’s value.