The USD has strengthened against the Indian Rupee in the past few weeks. However, today, the Indian rupee is trading at the weakest it has ever been against the dollar.
The strengthening dollar
The US dollar remains the bedrock of the global economy and international trade and finance reserve currency. However, in the past few months, the global economy has been undergoing unprecedented levels of inflation. In the US, for instance, the latest data shows the country had an 8.6 per cent inflation rate in May, according to year-on-year consumer price index data released on Friday.
Like all other currencies, the strength of the dollar comes from the country where it is primarily used, the US. However, with high inflation rates, it is expected to perform badly. However, this is not the case because, across the globe, other economies are performing worse, hence keeping the US dollar among the best-performing currencies.
The US federal reserve policies, interest rate differentials, and uncertainty in the current global economy have also contributed to the continuing strengthening of the dollar. The result has been a devaluation of the paired currencies, such as the Indian rupee.
USD to INR forecast
Today, the USD to INR is trading at the highest level since the pair started trading. This is due to the recent INR value depreciation and the strengthening of the USD.
In the past few months, the global economy has gone into turmoil with the rising cost of living and increasing gas prices. The result has been many investors going back to the dollar, which has also impacted the USD to INR by strengthening the USD.
Therefore, unless the current market conditions change, it is likely that the USD to INR prices will continue to rise. As a result, there is a high likelihood that in the next few trading sessions, USD to INR will be above 100.
However, if the prices of gas start to come down and the markets start to stabilize, we might see the INR strengthen against the dollar. This will also mean my bullish trend continuation will be invalidated.