USD/INR fails to hold above 71.00, approaches weekly lows
- US dollar accelerates broad-based slide during the American session.
- US and China sign trade agreement at the White House.
The USD/INR pair rose earlier today to 71.10, reaching a three-day high but failed to hold and pulled back. As of writing, trades near 70.70, in negative territory for the day, erasing yesterday’s gains.
The US dollar triggered the decline on Wednesday. The greenback weakened across the board amid lower US yields and an improvement in risk appetite. Wall Street is at record highs. Data from the US (PPI and Empire manufacturing) was mostly ignored by market participants that are awaiting the details on the US-China trade deal. The signing ceremony is taking place.
“The Indian rupee experienced a rocky start of 2020 caused by the increasing geopolitical tensions between the US and Iran. However, the tensions, for now, have subsided somewhat and the INR recovered from elevated levels of 72 seen early January. We expect the INR to continue strengthening against the USD in the upcoming months to levels between 70 and 71”, explained Rabobank analysts.
By mid-2020 at Rabobank, they expect the USD/INR to slide to 72-73, caused by recessionary risks in the US, renewed trade tensions between China and the US and an underwhelming performance of the Indian economy due to a lack of structural reforms in the past.