That’s why many analysts are looking toward Jerome Powell’s next move. DXY Index ChartĪ sudden Fed pivot could trigger a waterfall in DXY. After a bounce in April, the DXY index is once again back to its yearly lows. This has resulted in strength in the USD/INR pair within the past few weeks. Since the collapse of Silicon Valley Bank (SVB), the dollar strength index has declined by 4.4% from its yearly highs. The DXY Index chart shows a weakness in the US dollar. Indian Rupee Gains Strength Amid Falling DXY Nevertheless, the recent bank failures in the US have made future rate hikes very tough for Powell-led US FED. PCE data remained strong, which kept the policymaker Hawkish. However, the Feds preferred inflation gauge i.e. Consequently, USD/INR is also trading close to its 3-month lows.Īfter an increase in inflation in the first month of the year, the February and March CPI data showed decreasing inflation in the US. However, the effect was offset by the falling DXY index, which is trading close to its yearly lows once again. The rising oil prices due to recent OPEC+ production cuts generated some headwinds for the Indian Rupee. This has led to a weakness in Indian Rupee. However, in its April 2023 meeting, RBI surprised investors by pausing the rate hikes. The increase in interest rates by RBI gave the Indian Rupee much-needed strength in terms of the US dollar. Since the start of the year, the US Federal Reserve and the Reserve Bank of India (RBI) have both remained hawkish. USDINR Historical Chart USDINR To be Affected By More Rate Hikes in 2023 The pair peaked at 83.28 in Oct 2022 but had a sharp correction afterward. The currency pair pulled back slightly and did not make a return to new highs until 2022 when rising inflation forced the Federal Reserve to start raising interest rates. Before attaining its all-time highs, the USD/INR tasted the 76.45 price mark in March 2020, just as the coronavirus pandemic was sweeping through the world.
The pair surged to an all-time high of 77.887 rupees in 2022. Between then and April 2002, it rallied by 376.41% to 48.76 rupees.Īfter retracing to 39.9 rupees in November 2007, the USD/INR has been on an uptrend since then. By late 1983, the currency pair rose past the psychological level of 10 rupees to the US Dollar. USD to INR trading dates back to 1973 when the pair was floated in the forex market at an opening price of $1 to 7.98 rupees.
However, a recent hint by the Fed at a potential pause has proved to be a breadth of fresh air for currencies other than the US dollar. Since the start of 2023, US Fed has raised interest rates thrice by 25 bps. Indian Rupee has remained volatile this year due to changing US CPI numbers and the corresponding rate hikes.
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