USD/INR Forecast: September 2023

The month of August produced a whirlwind of price movement for the USD/INR particularly for traders who were using leverage.

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The USD/INR reached a high of nearly 83.4200 on the 15th of August, which was an apex value for the currency pair. On the 1st of August the USD/INR had been trading near the 82.1800 mark, and about a week before the Forex pair touched the 81.6300 ratio briefly. As of this writing the USD/INR is near the 82.6180 ratio with it typical fluctuating price being demonstrated. The price range of the USD/INR has been rather wide numerically, but per a percentage level regarding changes of value has actually been rather polite.

Leverage is a Key Factor for USD/INR Speculators to Remember

The amount of leverage a trader uses in the USD/INR changes the ballgame from a dull affair, to a memory that can last forever - good or bad depending on how the trade turns out. The USD/INR while showing a volatile price range last month certainly mirrored many of the other major currencies pairs.

This fact alone is rather important considering the notion the USD/INR isn’t necessarily a ‘free’ moving currency pair because of the limits the Indian government puts on its ability to trade in the Forex markets. The use of leverage in the USD/INR creates a gambling environment and the potential of dangerous outcomes for traders, even if the USD/INR is a ‘controlled’ currency pair.

Yet when the USD/INR broke above the 83.0000 level it certainly accomplished this with price momentum. And while it is my nature to be critical of government and central bank mandates which limit a currency to be traded, the USD/INR was allowed to follow the ‘natural’ progression of the broad Forex market and rise to record levels in the middle of August. The rise in value corresponded to other major currencies paired against the USD remarkably well.

USD/INR Behavioral Sentiment was King of the Hill in August

As the month of August started there was a lingering suspicion due to being overly optimistic, that risk appetite would stop the strength of the USD and the USD/INR could trade lower, speculators of other currency pairs who had bearish notions suffered from the same thought. A definite mix of rather troubling downgrades to U.S Treasuries and corporate banks created a lot of nervous sentiment in August. Worries created by the downgrades and rhetoric by the U.S Fed that interest rates would remain high for longer than most financial institutions expected, certainly created buying of the USD/INR, along with strength being shown by the USD globally.

  • Recent economic data published the past two days has continued to show slight weakness in the U.S, and this is likely going to cause the Federal Reserve to remain neutral over the mid-term.
  • It is unlikely the Fed can raise interest rates over the next few months.
  • However, a danger still exists in the U.S markets and thus global financial hubs due to a fear that more troubling U.S corporate banking news could emerge.
  • Real estate in the U.S is getting news coverage too and commercial real estate concerns could spark another sudden dose of risk adverse trading which would affect the USD/INR with more buying.

USD/INR Outlook for September 2023

Speculative price range for USD/INR is 81.7500 to 83.1000

The USD/INR produced a rapid climb upwards in August, but is should be pointed out has reversed lower and back to an almost well-practiced price range as the month of September gets ready to start. The ability of the USD/INR to trade in a manner that mirrors the other major forex pairs is intriguing and one that traders need to remember, even as they must stay alert to the potential every now and then to an intervention by the Reserve Bank of India. Traders who believe that the USD/INR can trade lower and test support levels seen in early August and July will find appealing reasons, but speculative.

A one month chart may not be enough for traders who are considering potential direction of the USD/INR in September. Speculators may want to look at three month charts also; this clearly shows the USD/INR is actually in the middle of its mid-term price range. The fact the USD/INR is stuck in the middle of its price range and traded to record highs in August when nervous behavior was rampant, leads to the potential thought the USD/INR could trade lower if global markets become tranquil. Wagering on calm financial markets to remain is a speculative opinion too.  Trading the USD/INR should be done with caution in September.

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Robert Petrucci
Robert Petrucci has worked in the Forex, commodity, and financial profession since 1993. Important aspects of his work involve risk analysis and advisory services. As an advisor in a Family Office he maintains a conservative approach for wealth management and investments. Robert also works in private finance with investors and companies delivering financial and management services.