Oil prices fell back to the dollar, and the Indian rupee continued to strengthen

The US dollar continued its correction against the Indian rupee (USD/INR) on Tuesday, with the exchange rate trading around 94.58. The recent significant pullback in international crude oil prices has benefited the Indian economy, which relies on energy imports. Lower import costs have improved market expectations for India's trade balance and inflation prospects, thus boosting the Indian rupeeRaise one's headGet stronger.

Previously, the relevant parties reported that the situation in the region has eased. The market expects that the main energy transportation corridor will gradually resume normal traffic, and the global energy supply tension has eased. Although the details of the complete agreement are still to be announced, and investors are particularly concerned about whether the original mode of traffic will be maintained in the future, overall, the expectation of crude oil supply returning to the market has weakened the upward pressure on oil prices. Although the crude oil futures contract expiring on June 18 on the Indian Mercantile Exchange (MCX) rebounded slightly to around 7,640 rupees in early trade, it is still close to the eight-week low of 7,550 rupees hit earlier.

In addition to energy factors, overseas capital flows have also become an important driver of the appreciation of the Indian rupee. As global risk aversion has weakened, international investors have regained confidence in the Indian stock market. Data show that after net selling of about 4.643 trillion rupees in the previous two weeks, overseas institutional investors returned to net buying on Monday, buying about 20 billion rupees on the day, indicating that the market risk appetite is gradually improving.

At the same time,foreign exchange marketAnother major focus remains the Fed's upcoming monetary policy decisions, which are widely expected to leave the federal funds rate unchanged at 3.50-3.75 per cent for the fourth time in a row. Investors will focus on the new leadership's latest judgment on the future path of interest rates, economic growth and inflation prospects. If the Fed releases a hawkish signal, the dollar could regain support, limiting the scope for further appreciation of the Indian rupee.

The recent increase in market attention to the Fed's decision-making independence has led investors to pay more attention to the interaction between future interest rate policy changes and macroeconomic forecasts.

From the daily trend, the US dollar against the Indian rupee maintained the adjustment pattern, and the price continued to operate below the 20-day exponential moving average of 95.26, with the short-term trend skewed to the downside. The relative strength indicator is located near 42.6, below the central axis level, indicating that the bulls' momentum has weakened. If the exchange rate fails to regain the key resistance of 95.26, the short-term may still further test the support of 94.43, and then fall below or further lower the low near 94.03; if the above breaks through 95.26, it is expected to re-challenge the 96.00 integer mark.

Looking at the 4-hour cycle, the USD/INR short-term is still in a volatile bearish structure, and the moving average system is tilting downward, indicating that bears are temporarily dominant. If the short-term rebound cannot break through the 95.00 to 95.26 area, the exchange rate may continue the correction trend; if the 94.43 support is lost, the market may accelerate the test of 94.03 or even lower. Investors need to focus on the impact of international oil price changes, Federal Reserve policy signals, and overseas capital flows on the Indian rupee.

edit summary

The recent strength of the Indian rupee has mainly benefited from the decline in international oil prices and the re-entry of overseas capital into the stock market. For India, which is highly dependent on energy imports, the decline in oil prices can help ease inflation and external balance of payments pressures. However, the Federal Reserve policy outlook remains a key variable affecting the trend of the dollar. If the US maintains a high interest rate level, it may limit the appreciation of the Indian rupee. In the short term, the trend of USD/INR will continue to be influenced by the combination of oil prices, Federal Reserve policy and changes in global risk sentiment.