- USD/INR drops for the fourth day in a row.
- Asian markets cheer increasing hopes of a cure to the coronavirus.
- Indian government’s expected easing in lockdown restrictions, upbeat performance of stock markets add strength to the INR.
- US data, virus updates will be the key.
USD/INR remains pressured for the fourth day in a row while declining to 75.27 amid the initial Indian session on Thursday. In doing so, the pair registers the best losing streak in a month.
While broad risk-on sentiment in Asia could be considered exerting downside pressure on the pair, upbeat performance of Indian stocks amid expectations of easing lockdown restrictions also weigh on the quote.
On Thursday, Asian markets took clues from the previous day’s US session news suggesting a nearness to the cure of the coronavirus (COVID-19). The update from Gilead Lifescience suggests that the experimental drug, Remdesivir, helps virus patients to recover faster.
It should also be noted that while extending the upbeat trade sentiment, markets paid a little heed to the disappointing figures of the US GDP and the Fed’s dovish halt. Additionally, China’s weaker than expected PMI figures as well as US President Donald Trump’s hints of a trade war with the dragon nation also failed to disappoint the Indian rupee (INR) bulls during the Asian session.
As portraying the optimism, MSCI’s index of Asia-Pacific shares outside Japan rises to the highest in six weeks whereas Japan’s NIKKEI gains over 2.0% to 20,200. Further, India’s BSE SENSEX also registers a gain of over 900 points, up 3.0% on a day, by the press time.
Moving on, INR is likely to lose its charm due to the comparative fundamental weakness in the Indian economy as well as expectations of rising COVID-19 cases. Analysts at the Australia and New Zealand Banking Group (ANZ) consider this as major catalysts to expect Indian rupee to fall to the record low of 80.00 by Q3 2020.
Technical analysis
A sustained break below 50-day SMA level of 74.96 becomes necessary for the sellers to aim for a late-March low near 74.78, until then the pair’s return to 76.00 can’t be ruled out.
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