USD/INR extends the recovery mode above 71.00 ahead of US data
- USD/INR takes out 71.00 amid increased USD buying by Indian banks.
- The spot ignores the broad pullback in USD and firmer Yuan.
- Markets shrug-off Chinese data, as they await key US macro news.
USD/INR extends the recovery from five-week lows into a second day this Friday, having finally surpassed the 71 handle in the last hour.
The Indian rupee extends the corrective slide against its American rival, as the Indian state-run banks continue buying the US dollar amid increased demand for the buck from the importers.
According to a dealer at a state-run bank, “Foreign banks’ dollar sales had kept the rupee supported at 70.95 since early trade. But persistent dollar demand from state-run banks for importers has given a depreciation bias for the unit.”
“71.05 remains a key level for the rupee through the day, and any depreciation beyond these levels could take the rupee closer towards 71.15,” the dealer added.
Meanwhile, the strong gains in the Chinese yuan following the release of the upbeat Chinese Industrial and Retail Sales data also failed to lend support to its Asian peer, the INR.
Further, the pair also ignored the latest downtick in the US dollar across its main peers, as markets resort to profit-taking in the long USD positions ahead of the key US Industrial Production and UoM Consumer Sentiment data due for release later today.
The greenback rose against its main competitors on Thursday after the US reported stronger Retail Sales in December. The data could strengthen the view that the economy maintained a moderate growth pace at the end of 2019, dousing hopes for further Fed rate cuts this year.
USD/INR Technical levels to consider