Forex News
- The Indian Rupee slides to a fresh all-time low at 94.23 against the US Dollar.
- Consistent foreign outflows from the Indian stock market have dragged the Indian currency.
- The Fed is expected to hold interest rates steady for longer.
The Indian Rupee (INR) extends its downfall against the US Dollar (USD) on Friday after a holiday the previous day. The USD/INR pair rises to near 94.23, the lifetime high, as the Indian currency continues to face significant pressure from consistent foreign outflows from the Indian stock market and higher oil prices amid conflicts in the Middle East, and a decent recovery move in the US Dollar.
Consistent FIIs selling hits Indian Rupee badly
Overseas investors have been consistently dumping their stake from the Indian stock market as higher oil prices due to the joint assault by the US and Israel against Iran have prompted uncertainty over earnings expectations of the Nifty 50 for the fourth quarter of FY 2025-26.
Theoretically, companies bear the burden of increased input costs by allowing a hit on profit margins or passing on to consumers, which both result in a deviation between projected earnings and actual numbers.
So far in March, Foreign Institutional Investors (FIIs) have remained net sellers on all trading days and offloaded their stake worth Rs. 81,262.5 crore.
US Dollar recovers after Thursday's sell-off
During the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades almost 0.3% higher to near 99.45. The USD Index recovers from Thursday’s low of around 99.00 amid the speculation that the Federal Reserve (Fed) will hold interest rates at their current levels by the year-end.
According to the CME FedWatch tool, the odds of the Fed holding interest rates steady or above the current range of 3.50%-3.75% in the December meeting are 80%, double than 40% seen a week ago. Speculation that the Fed will not cut interest rates the entire year has been intensified by de-anchoring inflation expectations globally amid higher oil prices.
On Thursday, the US Dollar declined over 1% after comments from several global central banks signaled they would also favor tight monetary conditions amid accelerating inflation projections, which diminished fears of likely policy divergence between the Fed and other central banks.
Technical Analysis: USD/INR surpasses 94.00
USD/INR jumps to near 94.23 on Friday. The near-term bias is bullish as the price extends above the rising 20-day Exponential Moving Average (EMA), confirming a strong uptrend. The recent surge has stretched the distance from the 20-day EMA, showing strong buying pressure rather than a gradual grind higher.
The 14-day Relative Strength Index (RSI) at 80 signals overbought momentum after a series of higher closes from mid-range readings, indicating trend strength but also a mature leg within this upswing.
Initial resistance sits near the psychological 95.00 level, with buyers maintaining control. On the downside, immediate support lies near the March 13 high around 93.00, close to the prior breakout region and above the 20-day EMA near 92.35, where pullbacks would test trend integrity. A daily close below 92.30 would weaken the bullish structure and open the way toward secondary support at 91.80, while holding above it keeps focus on resistance retests.
(The technical analysis of this story was written with the help of an AI tool.)
(This story was corrected at 10:25 GMT to say in the first bullet point that The Indian Rupee slides to a fresh all-time low at 94.23, and not 93.90.)
Indian economy FAQs
The Indian economy has averaged a growth rate of 6.13% between 2006 and 2023, which makes it one of the fastest growing in the world. India’s high growth has attracted a lot of foreign investment. This includes Foreign Direct Investment (FDI) into physical projects and Foreign Indirect Investment (FII) by foreign funds into Indian financial markets. The greater the level of investment, the higher the demand for the Rupee (INR). Fluctuations in Dollar-demand from Indian importers also impact INR.
India has to import a great deal of its Oil and gasoline so the price of Oil can have a direct impact on the Rupee. Oil is mostly traded in US Dollars (USD) on international markets so if the price of Oil rises, aggregate demand for USD increases and Indian importers have to sell more Rupees to meet that demand, which is depreciative for the Rupee.
Inflation has a complex effect on the Rupee. Ultimately it indicates an increase in money supply which reduces the Rupee’s overall value. Yet if it rises above the Reserve Bank of India’s (RBI) 4% target, the RBI will raise interest rates to bring it down by reducing credit. Higher interest rates, especially real rates (the difference between interest rates and inflation) strengthen the Rupee. They make India a more profitable place for international investors to park their money. A fall in inflation can be supportive of the Rupee. At the same time lower interest rates can have a depreciatory effect on the Rupee.
India has run a trade deficit for most of its recent history, indicating its imports outweigh its exports. Since the majority of international trade takes place in US Dollars, there are times – due to seasonal demand or order glut – where the high volume of imports leads to significant US Dollar- demand. During these periods the Rupee can weaken as it is heavily sold to meet the demand for Dollars. When markets experience increased volatility, the demand for US Dollars can also shoot up with a similarly negative effect on the Rupee.
Brown Brothers Harriman’s Elias Haddad notes that recent political comments briefly steadied risk sentiment, but renewed risk aversion has lifted the Dollar, Oil and bond yields while pressuring equities. With no key data due, focus is on Fed speakers. BBH argues that rate differentials keep DXY in a 96.00–100.00 range, but energy-shock-related stress skews USD risks higher.
Rate spreads keep Dollar rangebound
"Market sentiment steadied briefly overnight after Israeli’s Prime Minister Benjamin Netanyahu said the war will end sooner than people think and energy infrastructure will no longer be targeted. However, the short-lived calm gave way to a fresh bout of risk aversion. Crude oil prices are back up, equity markets are under renewed downside pressure, bond yields are pushing higher again, and USD is firmer."
"As a result, interest rate expectations adjusted higher. US rate cut bets over the next twelve months has been priced out, while in most other advanced economies additional rate hikes have been priced in."
"Bottom line: rate differentials between the US and other major economies still anchors DXY within a 96.00-100.00 range. But until we reach peak fear around the energy shock, USD risks remain skewed to the upside driven by dollar funding needs in periods of financial market stress."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- Silver price trades calmly near $72.80, but is set for a third straight negative closing.
- Higher oil prices due to Iran conflicts have de-anchored inflation expectations.
- Global central banks are unlikely to make dovish monetary policy adjustments in the near term.
Silver price (XAG/USD) trades in a tight range around $72.80 during the European trading session on Friday. The white metal holds onto Thursday’s recovery move, which was driven by weakness in the US Dollar (USD). Technically, a lower US Dollar makes the Silver price an attractive risk-reward trade for investors.
On a broader note, the precious metal is uncertain and looks set to end the week on a negative note. This would be the third straight negative closing.
Silver price remains under pressure this week as global inflation expectations have de-anchored due to higher oil prices in the wake of the war in the Middle East, which involves the United States (US), Israel, and Iran. Oil prices gained sharply as Iran closed the Strait of Hormuz, as part of retaliation against the joint assault by the US and Iran, through which 20% of global oil is shipped.
In addition to the closure of the Strait of Hormuz, attacks from Iran and Israel on several energy facilities in the Middle East have prompted energy supply concerns, which have eventually contributed to higher energy prices.
Meanwhile, global central banks have also warned of energy-linked upside inflation risks and have argued against reducing interest rates in the near term.
Theoretically, signals of an extended pause by various central banks on the monetary policy outlook diminish the appeal of non-yielding assets, such as Silver.
Federal Reserve (Fed) Chair Jerome Powell said in the post-monetary policy meeting conference on Wednesday. “Higher energy prices will push up inflation in the near term, but the effects remain uncertain,” Powell said.
Silver technical analysis
XAG/USD trades flat at around $72.80 at the press time. The near-term bias is bearish as price extends its decline below the 20-day Exponential Moving Average (EMA), which now tracks above spot and acts as dynamic resistance near $81.22. The sequence of lower closes from the mid-$90s to the low-$70s underscores persistent selling pressure, while the RSI slipping below 40.00 for the first time in 11 months is confirming downside momentum without reaching oversold territory. This setup keeps sellers in control unless the price can recover and stabilize back above the broken average.
Immediate resistance appears at $76.50, where a prior reaction high aligns with the descending short-term structure, followed by a stronger barrier around $81.00, capped by the 20-day exponential moving average. A sustained break above $81.00 would weaken the current bearish tone and open a move toward the $84.00 area. On the downside, initial support is located at round-level $70, followed by Thursday's low of $65.51.
(The technical analysis of this story was written with the help of an AI tool.)
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
European Central Bank (ECB) policymaker and Governor of the Central Bank of Ireland Gabriel Makhlouf stated during European trading hours on Friday that the central bank doesn’t have a pre-determined rate path and the decision would be made meeting by meeting.
Remarks
Don't think ECB has a tightening bias.
Two price hikes are part of the ECB's baseline scenario.
If facts point to action, ECB will take action.
Must keep a close eye on facts, will decide in April.
Don't have pre-determined rate path.
Determined to achieve 2% inflation target.
Managing extreme uncertainty.
Market reaction
There seems to be no impact of ECB Makhlouf's comments on the Euro (EUR). However, EUR/USD is down 0.4% to near 1.1540 as of writing.
ECB FAQs
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
According to MUFG’s Derek Halpenny, the ECB’s communication and achievement of its price stability goal leave it in a relatively better position than the BoE, but he is sceptical that higher front-end Euro yields will sustain Euro strength. With DXY correlations shifting from yield spreads to Brent, he continues to see EUR/USD downside risks tied to conflict-related Oil dynamics.
ECB stance offsets but cannot erase risks
"Similar to the GBP view, we are not convinced that the jump in front-end yields will continue to support the euro."
"The DXY correlation with yield spreads has weakened considerably with a correlation with Brent taking over and hence we continue to see EUR/USD downside risks related to the conflict."
"The yield dynamic may curtail the scale of drop and indeed the yield spread move was quite different in 2022."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Silver prices (XAG/USD) rose on Friday, according to FXStreet data. Silver trades at $73.17 per troy ounce, up 0.45% from the $72.84 it cost on Thursday.
Silver prices have increased by 2.93% since the beginning of the year.
Unit measure | Silver Price Today in USD |
|---|---|
Troy Ounce | 73.17 |
1 Gram | 2.35 |
The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 64.14 on Friday, up from 63.84 on Thursday.
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
(An automation tool was used in creating this post.)
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