USDINR is one of the exotic currency pairs that has been gaining popularity in recent years. In this article, the focus will be on the key drivers of the pair’s movements. It will provide an apt foundation for the USD to INR forecast for 2022 and beyond.
USD to INR trading dates back to 1973 when the pair entered the market at an opening price of 7.98 rupees. However, it was not until late 1983 that the currency pair rose past the psychological level of 10 rupees. Between then and April 2002, it rallied by 376.41 to a record high of 48.76 rupees.
It momentarily dropped to 40 rupees in late 2007. Since then, USDINR has been on an uptrend, surging by close to 100% to an all-time high of 77.05 rupees at the onset of the coronavirus pandemic in April 2020.
With the subsequent pullback, the record high has remained evasive ever since. Nonetheless, it has remained above the resistance-turn-support zone of 72 rupees. While it is still on the multi-year uptrend, it has primarily been trading between 72 and 76 rupees. Efforts to break the range’s upper border in December 2021 were unsuccessful.
Indian Rupee News
USD to INR forecasts for the short and medium-term are founded mainly on the efforts by the Federal Reserve and the Reserve Bank of India (RBI) to deal with inflation. In January, the Fed’s hawkish pivot’s interest rate decision boosted USD to INR to 75.32 rupees. While it has since pulled back, the currency pair is still above the support zone of 74 rupees. Investors will be keen on whether the US central bank will begin hiking interest rates in March and by how much.
In the meantime, USDINR is expected to react to the US nonfarm payrolls data scheduled for release on Friday. Analysts expect a significant decline in the job numbers due to the Omicron wave.
ADP’s data released on Wednesday indicated that firms dropped 301,000 jobs in January. Nonetheless, the market may react subtly to the expected decline in payrolls as COVID-19 cases subside. Besides, the numbers will likely bounce back as businesses are still looking to hire.
Besides, investors keen on USD to INR forecast 2022 and beyond will also be eyeing the RBI interest rate decision scheduled for the coming week. While most economies have been tightening their monetary policies, India is among the few nations that have maintained an accommodative one.
In next week’s event, investors will be looking for a probable reduction in liquidity and other cues on normalization. Notably, the interest rate decision comes when India has recorded the third wave of coronavirus infections. Besides, consumer prices surged to 5.6% in January.
Will the Indian Rupee Rise in 2022?
Foreign inflows have helped boost the Indian Rupee at the start of 2022. However, as they decline in the coming months, ICICI Bank’s USD to INR forecast for 2022 is for the Rupee to weaken against the greenback. The inflows are from foreign investors purchasing Indian equities and the Indian firms issuing dollar bonds. In addition, higher crude oil prices and a strong US dollar are also bearish factors for the USD to INR forecast 2022.
A daily chart highlights an ascending channel whose formation began in June 2021. The higher highs and higher lows are an indication of a broader uptrend. Based on the fundamental and technical analyses, the USD to INR forecast for 2022 places 2021’s high of 76.45 Rupees at an attainable level. However, it may face resistance at the crucial 75.50 Rupees in the short term. On the flip side, 74.00 and 73.00 are possible to support levels for the currency pair.
What to Expect from RBI
As aforementioned, RBI will release its interest rate decision in the coming week. Analysts expect RBI to maintain interest rates at 4%. Indeed, the rates will likely remain unchanged in the coming months as the central bank expects inflation to remain within the tight range of 2% and 6%.
India’s central bank appears to focus on the local economy’s health without necessarily acting on the pressure from the hawkish tone adopted by other central banks. With foreign exchange reserves worth over $630 billion, RBI is able to insulate the country’s economy from the volatility that will likely emerge from the Fed’s aggressive tightening of its policy.
What to Expect from Fed
Similar to other currencies, central bank’s policy is one of the key drivers of USDINR. Indeed, it is one of the factors that an investor should consider for a feasible USD to INR forecast.
The Federal Reserve’s hawkish tone further weighed on the Indian Rupee at the January meeting as the US dollar rallied.
Before the meeting, the markets had priced four rate hikes within the year. However, based on the Fed Chair’s comments, an increase in interest rates at every meeting is likely. Subsequently, the markets are pricing in five to seven hikes by year-end. The first one will likely be in March.
Besides, as part of what to expect from the Fed, a reduction of its $8.9 trillion balance sheet is bound to impact USDINR. The cuts are part of the Fed’s aggressive efforts towards dealing with the heightened inflationary pressures.
What will be USD to INR in 2025?
Long Forecast’s USD to INR forecast 2025 is for a fresh all-time high at 79.79 Rupees at the beginning of the year. It expects the currency pair to average at 80 Rupees by mid-year before rallying further to 86.97 Rupees by the end of the year.
While this USD to INR forecast 2025 is viable, it is important to note that analysts can get it wrong. Therefore, it is crucial to conduct individual research and stick to the adopted trading strategies depending on your risk appetite.
USD to INR Forecast 2030
A feasible USD to INR forecast for 2030 is informed by the economic health of India and the US, Fed and RBI’s monetary policy, and the demand for the US dollar as a safe haven. Hence, a strong dollar will likely push USD to INR to a new record high depending on the key drivers.
However, as an emerging market, India’s currency has the potential of strengthening further in the coming years. From that perspective, USD to INR forecast 2030 will be for the pair to remain within a range for several years.
How to analyze USDINR
A viable USD to INR forecast also includes technical analysis. Of course, investors’ strategies often differ depending on one’s experience and preferences. Nonetheless, some of the basic tools to analyze USDINR include support and resistance levels, trend lines, moving averages, RSI, and Fibonacci retracement. One can predict USD to INR movements in the short, medium, and long term through these tools.
How to trade USDINR
To trade USDINR, one needs to open an account with a reputable forex broker. When researching the best broker, it is helpful to consider their spreads, commissions, and other fees. It is also possible to trade the currency’s derivatives in the form of USDINR futures.