Let’s take a look at the factors that have been driving the pound US dollar exchange rate across the week.
Indian Rupee plunged on the currency market registering its worst trading week since the beginning of August. The USD/INR exchange rate settled 83 paise higher at 71.15 during the previous’s week trading activity. During the early Asia trading hours, Rupee was seen trading at 71.27 against the US dollar.
It appears that the negative effect of India’s rating outlook being lowered from stable to negative has induced a fresh round of selling pressure as investors dumped the Indian Rupee on the currency market. Additionally, Nomura Research has cut the GDP growth forecast from 5.7% to 4.9% in 2019 and from 6.9% to 6.0% for 2020.
In the year so far, foreign fund inflow showed investors were net buyers of the Indian debt and equity market. The foreign institutional investors bought almost $5.34 billion of debt in the past year so far, and nearly $10.85 billion in Indian equities.
The benchmark equity index NIFTY 50 came under pressure and settled at 23391. However, it was seen quoted at 23331 during the Asia trading hours. The Indian 10-year government bond yield has registered a modest 0.03% gain being quoted around 6.556 percent.
The dollar index, which gauges the greenback’s strength against a basket of major currencies closed the previous trading week on a strong positive note closing near the session high at 98.40, a three week high.
On other news, despite heavy negotiation on a new possible location to sign the trade deal, the US and China have not yet made any material progress on that front. Investors are still hoping that the trade war that has disrupted the global economy will ease in the future.
USD/INR Technical Pattern
On the technical level, the USD/INR has given back most of its early gains and now it seems poised to advance more if the prevailing bullish momentum follows through. Traders are now eyeing a possible break of the previous month’s high established at 71.56. On the downside the key support level 70.90 has the potential to hold any downside pressure.