Definition
USDINR
USDINR is the exchange rate of the US dollar against the Indian rupee, the most-watched currency pair in India and a key barometer of capital flows and import costs.
USDINR sits at the centre of India's external economics. A rising USDINR (rupee depreciation) makes imports like crude oil and electronics costlier and can stoke inflation, while helping exporters and IT services firms that earn in dollars.
The rate is driven by FII/FPI flows, the current account deficit, crude prices, US Fed policy and the RBI's intervention to smooth volatility. It trades onshore as spot and as currency futures/options on the NSE and BSE, and offshore via NDFs. The RBI does not target a fixed level but manages disorderly moves.
Related terms
- Current Account Deficit (CAD)The current account deficit arises when a country pays more abroad for goods, services and income than it earns, meaning it is a net borrower from the rest of the world.
- Non-Deliverable Forward (NDF)An NDF is a cash-settled offshore currency forward where no actual exchange of the underlying currency occurs, used to trade or hedge restricted currencies like the rupee.
- EURINREURINR is the exchange rate of the euro against the Indian rupee, a cross pair derived from EURUSD and USDINR rather than traded directly in the interbank dollar market.
- RBI InterventionRBI intervention is the central bank's buying or selling of foreign currency in the spot, forward or futures markets to manage rupee volatility and liquidity.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.