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 was floated in the forex market at an opening price of $1 to 7.98 rupees. By late 1983, the currency pair rose past the psychological level of 10 rupees to the US Dollar. Between then and April 2002, it rallied by 376.41% to 48.76 rupees.
After retracing to 39.9 rupees in November 2007, the USD/INR has been on an uptrend since then. The pair has surged to an all-time high of 77.887 rupees in 2022. Before attaining its all-time highs, the USD/INR has tasted the 76.45 price mark in March 2020, just as the coronavirus pandemic was sweeping through the world. 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.
What is Behind the USD/INR’s Rise to New Highs?
The USD to INR price has surged to an all-time high as investors react to the extremely hawkish tone by the Federal Reserve. The Fed has already hiked interest rates by 150 basis points this year and analysts expect it to hike by more than 200 basis points this year. The next rate hike will come in the FOMC July meeting.
The Reserve Bank of India has also shifted its tone in the past few months as the country’s inflation continues rising. It has made two rate hikes and analysts expect that it will hike rates several times this year.
India is also benefiting from the ongoing crisis in Ukraine. As part of a deal between India and Russia, the country is buying millions of barrels at a highly subsidized rate. This will make India the best performing emerging market this year.
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. In addition, higher crude oil prices and a strong US dollar are also expected to create bullish a USD to INR forecast 2022.
A weekly chart indicates that the USD/INR has been in a range for several years. The pair made a strong bullish breakout above the key resistance at 76.91 recently even as the Fed and RBI hiked rates. Therefore, there is a likelihood that the pair will keep rising as bulls target the key resistance at 80.
What to Expect from RBI
The Reserve Bank of India was widely expected to maintain a dovish policy this year. However, the bank surprised investors when it decided to hike interest rates recently. Therefore, the outlook for the bank is increasingly hawkish as consumer inflation surges in India. It is not alone. Other emerging market central banks like those in South Africa, Mexico, and Argentina have been hiking rates.
What to Expect from Fed
Central bank policy is one of the key drivers of USD/INR. 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. Three rate hikes have already occurred and more are expected, given recent Fedspeak.
What will be USD to INR Rate 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.
It is important to note that the targets for April 2022 have already been met, while the price pattern on the daily chart indicates that there is a high potential for the May 2022 price target of 79.19 to be met in June. As it is, this makes the USD to INR forecast 2025 above quite viable, albeit with some minor differentials. It is crucial to conduct your own individual research.
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.
Technical Outlook: USD/INR
The evolving bullish pennant on the daily chart points to a potential continuation of the uptrend. This pattern is expected to resolve with a measured move that will take the USD/INR pair beyond the 79.0000 mark. The decline of the last two sessions must produce a bounce off the pennant’s lower border and take out resistance levels at 77.6534 (26 May 2022 highs) and 77.8760 (20 May 2022 high) on the way to accomplishing the new targets.
On the flip side, a breakdown of the pennant’s lower border invalidates the pattern and opens the gates to a corrective move that targets 77.1577 initially (10 May 2022 high). Below this level, 76.6866 and 76.3812 (28 March high and 2 May 2022 low) form additional targets to the south.
USD/INR: Daily Chart
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.