USD/INR forecast as the Indian rupee hits all-time low

The Indian rupee continued its strong downward momentum, reaching its all-time low as concerns about the economy persisted. The USD/INR exchange rate soared to 88.7, up by almost 6% from its lowest level in April this year.

Why the Indian rupee is plummeting

The USD/INR exchange rate has been in a strong uptrend this year, making the Indian rupee the worst-performing currency in the Asian region.

The currency has plunged as relations between the US and India have worsened. For one, Donald Trump has put in place a 50% tariff on Indian goods, mostly because the country continues to buy Russian oil. India has insisted that it was in its best interest to buy this oil, which it refines and sells internationally.

The crisis escalated recently when Trump changed rules for the H1-B visa, boosting the price from less than $300 to $100,000, an amount companies will not be prepared to pay.

Trump argues the fee hike will be important as it will help to prevent companies from hiring low-cost workers at the expense of Americans. Companies, on the other hand, argue that the visas are important as they help them hire high-skilled employees, who help to build their products.

At the same time, some companies note that it will be cheaper for them to set up offices in India instead of paying the substantial fee.

India is highly exposed to the H1-B visa because its workers account for 70% of those who receive it. At the same time, some analysts warn that the situation will likely lead to lower remittances from the United States, which brought in over $35 billion in foreign currency last year. In a note, an analyst said:

“The developments on the H-1B visa have affected sentiment for the rupee, while recent foreign outflows have also pushed the currency lower. This is why the rupee has largely ignored the ongoing dollar weakness.”

USD/INR technical analysis

The daily timeframe chart shows that the USD to INR exchange rate has been in a strong uptrend in the past few months, moving from a low of 83.75 in May to 89 today.

It recently moved above the important resistance level at 87.97, the highest level in February this year.

The pair has jumped above the 50-day and 200-day Exponential Moving Averages (EMA), which have provided it with substantial support since July.

At the same time, the Relative Strength Index (RSI) continues to rise and is slightly below the overbought level of 70. The two lines of the Relative Vigor Index have also formed a bullish crossover pattern.

The USD/INR pair has moved above the top of the trading range of the Murrey Math Lines tool. Therefore, this tool shows that the pair has more upside, potentially to the extreme overshoot level of the Murrey Math Lines tool at 92.18. A drop below the support at 87.97 will invalidate the bullish outlook.

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