Big blow! This is what will move your rupee going forward

INR vs USD: Indian National Rupee (INR) is expected to go down against the US dollar (USD) if the US-China trade war lingers further. According to market experts, the Chinese economy and its currency is 'lead indicator' for all emerging markets, which includes India as well. Since both US and Chinese administrations have failed to come out with any conclusive solution to their trade war even after the several rounds of trade talks, any further blow in the US-China trade war can pull down the national currencies of the emerging economies including INR.

Rahul Gupta, Currency Research Head, Emkay Global Financial Services Limited said, “The global trade turmoil between US-China and political imbalance in Kashmir led USD versus INR spot open at the 11-week high. Trade tensions were revoked after China retaliated to counter the tariff threat. China has asked state purchasers to halt imports of American agricultural products. These lead Chinese yuan dropped to a 11-year low of 7.04, putting pressure on emerging market currencies including rupee. I believe that the risk-off mood will continue to stay for some time now. Over the day, USD versus INR violated the major resistance of 70.20 from its 200 SMA. If the pair closes above 70.20 then the view will continue to be bullish and we can see 71.30 before the month-end. While on the downside 69.85 will continue to act as strong support. Meanwhile, this week is the RBI policy. Widely, RBI is expected to cut rates further by 25bps and continue to hold the accommodative stance which will weigh on the rupee."

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Prakash Pandey, Head of Research at Fairwealth Securities said, "Even after currency manipulation charges, the Chinese government has devalued its national currency yuan by near 7 per cent and US President Donald Trump has made it clear that there would be 10 per cent tariff charges that the US government would levy on all Chinese imports." Pandey said that since the Chinese economy and its currency yuan is the lead indicator for all emerging markets, Indian currency is expected to feel the heat of this  US-China trade war."