Indian Rupee crushed during last week’s trading session and could face more troubles over the US — China trade impasse. The USD/INR exchange rate settled 45 paise higher at 71.50 during last week trading activity. Not before reaching a 10 week high at 72.06. During the early Asia trading hours and after the London open, Rupee was seen quote slightly higher around 71.68 against the US dollar.
The lacking of progress towards a trade deal couple with early signs of weakness from China, are the biggest external threats that can impact the Indian Rupee.
Although, over the weekend, there was a slight change in the tone towards the intermediary trade deal. The chances of a trade deal agreement by year end are very slim and any other delays can spill over to the emerging market currencies.
State media Xinhua revealed that the US President Donald Trump and China President Xi Jinping had “constructive talks” on the intermediary trade deal in a phone call on Saturday. No other significant details were revealed. This was enough to motivate investors to bid higher the Indian Rupee during the first trading hours of the week.
The benchmark equity index NIFTY 50 closed the previous week of trading activity almost unchanged settling at 11895. However, during early Asia trading hours NIFTY 50 gaped higher. It closed the trading day down at 11867. The Indian 10-year government bond yield was quoted down at 6.482 percent or -0.57%.
The dollar index, which gauges the greenback’s strength against a basket of major currencies, closed down during last week trading activity setting at 98.00.
USD/INR Technical Pattern
On the technical front, the USD/INR exchange rate is retreating from a new 10 week high but it could soon find support in the 71.35 — 71.30 area. The market sentiment definitely supports the USD/INR bullish side. There are no guarantees that currency traders may try again to challenge the 2019 high established at 72.42 on 3 September.