Indian Rupee plunges on the currency market posting losses against the greenback for the fourth consecutive day. The USD/INR exchange rate settled 43 paise higher at 77.05 on Wednesday. During the early Asia trading hours and after the London open, Rupee managed to recover all Wednesday’s losses against the US dollar and was seen quoted as low as 71.56.
The main catalyst that motivated currency traders to dump the Rupee was the warnings made yesterday by the USA President Donald Trump during his speech at the Economic Club of New York. Basically, Trump threatens additional tariffs on China if the world’s two most powerful economies in the world fail to reach an agreement on the Phase one trade deal.
The benchmark equity index NIFTY 50 traded lower on Wednesday, settling at 11840. This was the first trading day after the equity market closed on Tuesday due to Guru Nanak Jayanti holiday, registering a -0.61% loss. However, during early Asia trading hours NIFTY 50 traded much more lower reaching 23062. The Indian 10-year government bond yield has registered a loss of 0.21% being quoted around 6.514 percent.
The dollar index, which gauges the greenback’s strength against a basket of major currencies closed on Wednesday indecisive at 98.33.
Most Asian stock indices in Shanghai, Tokyo, Hong Kong and New Delhi plunged. The trade talks have reached a stumbling block as China is trying to put pressure on the Trump administration to roll back some of the early imposed tariffs.
Washington isn’t budging in front of China demands and this refusal can add more uncertainties over the faith of the Phase one trade deal. The chances of a trade deal agreement by year end are narrowing and any other delays can send the wrong signal to the financial markets.
USD/INR Technical Pattern
The USD/INR technical pattern is threatening to challenge the 2019 high established at the 72.42 level on 3 September. The four consecutive day rally has revived the long-term USD/INR bullish trend and brought Indian Rupee to a 10 week low.