USD INR exchange rate versus long term stock markets trends

I have attached charts, highlighting long term trends of USD INR along with monthly charts of Nifty and S&P 500
We can clearly see that during challenging economic conditions in India, the US dollar tends to gain strength. While during the periods of economic prosperity, Indian national rupee (INR) gains in value over time. Dollar still remains as a hedge in case of economic crisis in India.US is perceived to be an economy which is better equipped to handle any sort of political or economic shock hence we see this “flight to safety” trade, every time there is panic in the D-Street.

USD INR
Currency Futures Trading Trend US dollar index USD INR technical levels inter market correlation
USD INR


Nifty
Nifty Futures Trading Trend index technical levels inter market correlation free analysis tips high probability
Nifty


S&P 500
S&P 500 Futures Trading Trend index technical levels inter market correlation free analysis advice high probability setup divergence RSI
S&P 500


Charts Courtesy : Quote.com


Related Post
5 Factors Affecting Currency Exchange Rate

14 comments:

  1. hi,
    thanks for the explanation.
    the five factors are well thought off and nicely explained..
    however, Only by studying the long term chart of the dollar versus the INR, do you not see a higher top and higher bottom formation suggesting further weakening of the INR against the dollar..??
    Awaiting your reply on this..
    Thanks

    ReplyDelete
  2. @Shazia

    "do you not see a higher top and higher bottom formation suggesting further weakening of the INR against the dollar..??"
    Yes I feel the same

    One more interesting observation.

    S&P made a lower low (Compare 2002 and 2009 bottom) indicating a weak market.
    Nifty made a higher low (Compare 2002 and 2008 bottom) indicating a strong market.
    Yet the USD INR made a higher high (Compare 2002 and 2009 top)indicating a weak Rupee or strong Dollar.

    Clearly showing that US Dollar is perceived to be a stronger currency in crisis like situations.Even if the economic conditions are itself, quite challenging in the US economy.

    The US economy will perform comparatively better than the Indian economy in the 5 factors discussed in the previous post.
    Cheers

    ReplyDelete
  3. Dear Anuj,

    The new look blog looks great .

    I have posted analysis of different Time Frames of the market in my blog ,The Third Eye -http://aar-vee.blogspot.com/ , Please have a look and leave your comments and observations .

    Regards.and Cheers !!

    ReplyDelete
  4. @Anuj,

    Can you please elaborate what will be the impact on Gold & Commodity prices?

    Regards,

    Veer

    ReplyDelete
  5. @Veer
    In general, you will see a "top" in bond markets first followed by equity markets and then followed by commodities.
    While bonds usually "bottom out" first followed by equity markets and then commodities.

    You can read, Inter market Analysis by John Murphy,a very nice book, full of such historical correlations that still exits in the markets.
    Cheers

    ReplyDelete
  6. @ Anuj ,

    We are waiting for your update.

    ReplyDelete
  7. @abhishek
    LOL

    http://financeandtradingmadeeasy.blogspot.com/2011/01/indian-markets-futures-trend-update-31.html

    ReplyDelete
  8. hi A J ,

    Thanks for explanation. this is very help. Hope you explain about USD/INR Daytrading charts also in same manner.

    ReplyDelete
    Replies
    1. Hi Gopi,
      Well short term trading and day trading is all about technical analysis. When long term trend is clearly visible like these days, we can trade long only or short only using technical analysis for short term.

      Correlation in short term analysis may or may not exist as clearly as we have in the long term as described above.

      Delete
  9. Today Nifty Open at 6,056.15 with the gain of 66.55 (+1.11%) point.
    please provide some tips target
    Best nifty option tips provider
    Nifty Tips on mobile by SMS

    ReplyDelete