Forex Analysis Report – 10/6/19…More Downside Risk On USD/INR (Rupee), But First…

Last year, a deep sell-off in emerging markets and a widening domestic fiscal deficit, exacerbated by rising oil prices, pushed the rupee down nearly 9%.  This year, it’s the continued trade war between the US and China that hurting the Indian economy and currency.  

India is taken a “any means as necessary” approach in trying to help its stagnant economy.  For example, several weeks ago, India’s Finance Minister Nirmala Sitharaman announced a cut to corporate tax rates for domestic companies to 22%. The goal was to increase the profitability of Indian’s publicly traded company and level the playing field of Indian companies competing again companies in other countries with a similar tax structure.  However, when a country is trying to jumpstart their economy, there is no better tool than to cut interest rates.

India’s central bank on Friday cut its benchmark repurchase rate for the fifth consecutive time this year as it continues a concerted push to reinvigorate a stuttering economy.

The Reserve Bank of India (RBI) lowered the repo rate by 25 basis points to 5.15% with five members of its Monetary Policy Committee voting in favor, versus one who backed a 40 basis point cut.

The decision came against a backdrop of weaker growth, a resurgence of financial stability risks and a surprise fiscal stimulus in the form of a recent corporate tax cut.

More aggressive policy moves are expected, however, with the economy having deteriorated for five consecutive quarters, most recently hitting a six-year low of 5% in the second-quarter of 2019.


Monthly Chart (Curve Time Frame) – monthly supply is 73.500 and monthly demand is 63.500.

Weekly Chart (Trend Time Frame) – the trend is sideways.

Daily Chart (Entry Time Frame) – the price has reacted to both supply zones, and has the potential to go much lower, but the chart suggests price has to close below the pivot low for confirmation first that price will go a lot lower.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

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