The Indian Rupee (INR) trades marginally higher against the US Dollar (USD) while entering the weekend. The USD/INR pair ticks down to near 96.30 as the Indian currency rises, following Reserve Bank of India’s intervention.
According to a Reuters report, the Indian central bank likely intervened to limit the Indian Rupee’s fall. The report also showed that the central bank has been intervening almost daily in both the spot and non-deliverable forward markets to support the currency; however, the scale of intervention has been relatively measured considering the intensity of the pressure on the rupee.
However, the support regained by the Indian currency after underperforming the entire week could prove to be short-lived amid fears of further escalation in global energy supply disruption.
In the opening trade, the MCX Crude Oil contract expiring on July 20 is up 1.16% to near Rs. 7,700, close to its monthly high of Rs. 7,832 posted on Tuesday.
Currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, tend to underperform in a high-oil-price environment.
Iran threatens the closure of Red Sea if US attacks Iranian infrastructure
Earlier in the day, Iran asked Yemen’s Houthi militia to stand ready to close the Red Sea oil route if the United States (US) strikes Iranian power infrastructure, Reuters reported. Such a scenario would trim the already-low global oil supply, which could further accelerate fears of high inflation globally.
The threat from Iran is a response to remarks from US President Donald Trump, in an interview with Fox News, in which he said that military forces would be authorized to attack Iranian bridges and power plants if the nation doesn’t come to the table for negotiations.
US Dollar gains on risk-off mood
An improvement in the demand for safe-haven assets amid intensifying military aggression between the US and Iran has boosted the appeal of the US Dollar. At press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.1% higher to near 100.80.
However, the Greenback will likely conclude the week on a negative note, as traders have trimmed Federal Reserve (Fed) interest rate hike bets, following the release of the soft US Consumer Price Index (CPI) report of June on Tuesday.
According to the CME FedWatch tool, the odds of the Fed delivering an interest rate hike in the meeting later this month have dropped significantly to 10.2% from 24.6% recorded a week ago.
India’s growth fundamentals remain strong despite headwinds
Earlier in the day, RBI Governor Sanjay Malhotra said in an interview with Doordarshan that India’s fundamentals remain strong, and the economic expansion will remain intact at a higher pace despite geopolitical tensions. RBI’s Malhotra warned that ongoing tensions in the Middle East and the prospects of a weak monsoon season are seen as key risks for the economy.
Technical Analysis: USD/INR sees more upside towards 97.10
USD/INR trades at around 96.30, maintaining a bullish near-term bias as it holds above the 20-day Exponential Moving Average (EMA) at 95.55. The pair extends its advance after reclaiming the short-term trend indicator, while the Relative Strength Index (14) at 62.99 stays in positive territory, hinting that upside momentum remains constructive but not yet overbought.
On the downside, immediate support is seen at the 20-day EMA at 95.55, which reinforces the underlying bullish structure as long as it holds. Looking up, the all-time high at around 97.10 will be the key barrier for the pair.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
