Rupee Makes Big Gains
For those involved in trading lesser currency pairs, the Indian rupee has been looking very attractive lately, even against strong currencies like the U.S. dollar. On Friday, September 18th, the rupee went up by 1.2 percent against the dollar, making the total gains 1.3 percent over the course of the week. That’s the biggest weekly gain since the beginning of 2015, which gives Forex traders a big bump if they are following this particular pair. It also creates a strong framework for traders that haven’t looked at the rupee before but are interested in riding the momentum.
Much of the momentum that the rupee now has is thanks to the fact that the U.S. Federal Reserve did not raise rates during their latest September meeting. Most investors were expecting this to happen, both in the U.S. and outside of it, and because it did not occur, there is a renewed interest in putting money into businesses. It has had an immediate impact upon the U.S. dollar, and it has helped other currencies find a boost that they normally would not have seen. The Indian rupee has been one of the biggest beneficiaries of this event. It has gone up more against the USD than it has in the last two years, and it looks like it is going to keep rising for the near future.
Before the Fed moves forward with the rate hike that they clearly would like to impose, they will be watching other markets more closely, Chairwoman Janet Yellen has said. Besides China, India is one of the biggest opportunities, and growth in this market will be kept an eye upon. So far this year, the major inflation gauges within India say that they are well under the expected 6 percent inflation that was expected by January 2016. As of right now, the rate appears to be 3.66 percent. This will also be a factor in how India moves forward with their currency value. This will be an interesting area to watch in the coming weeks, especially as the U.S. dollar potentially weakens internationally. For several months, the USD has been strong as September approached. Now that the September monthly meeting has come and gone, the dollar is likely to drop against most other currencies. This is something to keep in mind for your Forex trading regardless of which pairs you focus on.
It’s also something that you can apply to your binary options trading. Forex traders love using this method of trading because it is so tightly structured when it comes to timeframe, yet still gives traders a way to ease up on risk because of the low stakes involved with cash. Most brokers have a minimum trade of $25, which is far less than what you would need to trade with a Forex broker unless you were using a ton of leverage.
Also keep in mind that just because the rupee is gaining against the USD does not mean that it will gain considerably against other currencies. The dollar is in a precarious situation because of the Fed’s activities, and the rupee was set to gain in a situation like this. Going up against other economies may be a different story, though. For example, the rupee has gained slightly against the euro over the last week, but when compared to the Japanese yen, it has pretty much stood still over the same time period. Each pair needs to be evaluated individually, regardless of whether or not one currency has been a standout in other pairs. This is a dangerous trap to fall into, and it can be easy when something like what’s happened between the USD and the INR is ongoing.