USD/INR Forecast: What is the Outlook for USD to INR?

Summary:
• What is the forecast for the USD to INR pair? We explain what to expect now that the USD/INR pair in the near term.

The USD to INR price remarkable rally continued on Monday morning as the Indian rupee crash accelerated. USD/INR is trading at 77.60, which is the highest it has been on record. The pair has risen by more than 5.30% from the lowest level on January 12th. It has also risen by more than 7.5% from the lowest level in 2021.

Indian rupee crash continues

The Indian economy is expected to have a strong growth in 2022. Indeed, according to the IMF, the country will record an annual growth rate of about 8.2%, making it the fastest-growing emerging market economy. Recent data is supportive of this view, as retail sales and industrial production have maintained their vibrancy this year. In addition, the country has also benefited from its relationship with Russia, which will see it buy oil at a discounted price.

The Reserve Bank of India (RBI) has also started its hiking cycle in its bid to fight the rising inflation. The bank hiked rates in an unscheduled meeting this month, and analysts now believe it will rise by 35 basis points in June. It will then rise by 50 bps in August and 25 bps in the next meetings until April 2023. 

Still, the Indian rupee has continued to lag even after the hawkish tone by the bank. This performance is mostly because of the strong US dollar as the Fed maintained its hawkish tone. The bank has hinted that it will hike interest rates in the coming months. The next key catalyst for the stock will be the upcoming US retail sales and housing starts.

USD to INR price forecast

The USD/INR price has been strong bullish in the past few months. A closer look shows that the pair has formed an ascending channel that is shown in blue. The current price is slightly below the upper side of this channel. It has also managed to move above the important resistance level at 75.80 and 77.17, respectively. It has also moved above the 25-day and 50-day moving average. 

Therefore, the USD to INR pair will continue rising as bulls target the next key resistance at 78. A move below the support at 77.18 will invalidate the bullish view.