Indian market inflows support rupee’s recent rise in USD/INR prices

The Indian market has seen quite a few inflows. As of late in support of the rupee’s recent rise in USD/INR. The foreign exchange reserves have seen strong gains, which are expected to continue to support the currency. The World Trade Organization estimates India’s exports and imports for 2015. Will reach $450 billion and $400 billion respectively, resulting in positive dollar balances for both years. Additionally, a one-year low for the Indian wholesale price index is expected this year as well. This is expected to support the currency, which will further help revive domestic demand and support the Indian economy. Further, the government promises to promote domestic agriculture. And infrastructure projects should also provide support for the rupee in the coming months.

A positive trade balance would also help India’s economy as well. It would remain one of the largest in Asia with an estimated gross domestic product (GDP) of $2 trillion. Although India does not receive much direct foreign investment from other economies. It continues to see inflows from foreign investors into its stock market and hedge funds.

How Should Retail Investors Tread The Bear Markets

THE RISE of investment advisers from the one-man band to mutual fund companies and pension funds has made the Indian financial markets more sophisticated than before. However, no one can deny that retail investors continue to bear a heavy brunt of the volatility and uncertainty in stock markets. In times of market turmoil, it becomes very difficult for retail investors to choose between inaction or pure speculation, on the one hand, and investing based on research, experience and expertise on the other.

The prevalent approach is to suppress one’s emotions by staying invested through thick and thin. The other extreme is speculating by following someone else’s calls blindly. Both approaches have their own pitfalls because they are driven by emotions and lack any real research or expert insight.

USD/INR: The Outlook Remains Uncertain

From a fundamental perspective, the rupee is expected to remain under pressure for now. This may mean that the recent rally is not sustainable. The Indian central bank has, from time to time, raised short-term interest rates and put more money into the system to support growth. However, it is still seen as a “low possibility” that rates would rise again in the near future. As such, investors can see this as a buying opportunity if they see the rupee stabilizing and central banks lowering their policy rate further in the months ahead.

Overall, it is not very clear how to read the USD/INR market in the short term. It would be a good idea for investors to stay close but not commit all their capital just yet. If there is any sense that the rupee is stabilizing and strong growth can be expected from India, then it would be a good idea to start investing again.

What is USD/INR?

USD/INR refers to the exchange rate between the U.S. dollar and the Indian rupee. This exchange rate is set by supply and demand, just like any other currency pair. It can fluctuate on a daily basis and is used as a benchmark for trade between India and the United States, Asia’s most important economies.

What Is The Current USD/INR Rate?

The current USD/INR rate is 59.8926 as of Saturday, August 29th, 2015 at 12:49 AM EST. The INR opened at 59.9299 and closed at 60.0608 on Friday, August 28th earlier that day. The USD/INR rate closed at 59.7563 on August 26th, 2015.

How Long Will USD/INR Trade At This Rate?

The currency pair is expected to fluctuate in the coming days and weeks from 59.8926 to 60.0005, which means that there is a very high chance that it will continue to trade above 60.0005 for the next several months. There are limited reasons for an upside price reversal in the immediate future, most notably due to beneficial demand from a weakening dollar and improving global economic conditions in Europe, Asia and the United States.