Forex, or foreign exchange, is the global market where currencies are traded. It is the largest financial market in the world, with daily trading volumes exceeding $5 trillion. Forex trading involves buying one currency and simultaneously selling another, with the aim of making a profit from the exchange rate fluctuations between the two currencies.
One of the most popular currency pairs in Forex trading is the USD/INR pair, which represents the exchange rate between the US dollar and the Indian rupee. The US dollar is the world’s dominant currency, while the Indian rupee is the official currency of India, the world’s second-most populous country.
The value of the USD/INR pair is influenced by a variety of factors, including economic data, geopolitical events, and central bank policies. Here are some of the key factors that have been affecting the current trade of USD/INR:
1. US Dollar Strength: The US dollar has been strengthening against most major currencies in recent months, as investors have flocked to the safety of the world’s reserve currency amid global uncertainty. This has also led to a rise in the value of the USD/INR pair, as investors have sought to take advantage of the higher interest rates and stronger economy in the US.
2. Indian Economic Growth: India’s economy has been growing at a steady pace in recent years, with GDP growth averaging around 7% annually. This has helped to support the value of the Indian rupee, as investors have been attracted to the country’s strong economic fundamentals and potential for future growth.
3. Geopolitical Risks: The ongoing US-China trade tensions, as well as tensions between India and Pakistan, have also had an impact on the USD/INR pair. In times of heightened geopolitical risk, investors tend to flock to safe-haven assets like the US dollar, which can lead to a rise in the value of the USD/INR pair.
4. Central Bank Policies: The policies of the US Federal Reserve and the Reserve Bank of India also play a role in the value of the USD/INR pair. The Fed’s recent interest rate hikes and balance sheet reduction have helped to support the US dollar, while the RBI’s decision to keep interest rates steady has helped to support the Indian rupee.
As of August 2020, the current trade of USD/INR is around 74.50. This means that it currently takes 74.50 Indian rupees to buy one US dollar. This represents a slight decline in the value of the Indian rupee compared to earlier in the year, when it was trading at around 71-72 against the US dollar.
Looking ahead, the value of the USD/INR pair will continue to be influenced by a wide range of factors. These could include the outcome of the US presidential election, the ongoing COVID-19 pandemic, and any changes in central bank policies. As with any currency pair, investors will need to carefully monitor these factors and make informed trading decisions based on their analysis of the market.
