This week let’s take a look at the Indian economy and its role in the world economy. The idea of doing this blogpost came to me this week as I was reading an article that now officially has India as the world most populace country. “In 2023, India overtook China as the country with the largest population in the world, with more than 1.43 billion people “To give you some perspective, the United States has 331.9 million people. Absolutely incredible, if you ask me….
India plays a significant and growing role in the world economy, driven by its large population, diverse economy, and efforts to liberalise and reform various sectors.
Some key aspects of India’s role in the world economy:
Large Population and Market Size: With its large and young population represents a substantial consumer market. The sheer size of the Indian market makes it an attractive destination for multinational corporations seeking growth opportunities.
Economic Growth: India has experienced robust economic growth in recent decades, becoming one of the fastest-growing major economies. Its GDP growth has been driven by factors such as domestic consumption, investment, and a growing services sector.
Information Technology and Services: India has emerged as a global hub for information technology (IT) and software services. The Indian IT industry, including software development and business process outsourcing (BPO), has gained international prominence, contributing significantly to India’s export earnings.
Manufacturing Hub: India has been working to strengthen its manufacturing sector, aiming to become a global manufacturing hub. Initiatives such as “Make in India” seek to boost domestic manufacturing and attract foreign investment in sectors like electronics, automobiles, and textiles.
Service Industry: Beyond IT, India has a well-established service sector, including financial services, telecommunications, healthcare, and education. The country’s service industry has become a key driver of economic growth and employment.
Agricultural Sector: Despite the shift toward services and industry, agriculture remains an important part of the Indian economy. The country is a major producer of various agricultural commodities, and the sector supports a significant portion of the population.
Global Trade: India actively participates in global trade, with a focus on both exports and imports. The country engages in trade agreements and negotiations to enhance its global economic integration. The service sector, particularly IT and business services, contributes significantly to export earnings.
Foreign Direct Investment (FDI): India has been working to attract foreign direct investment across sectors, including infrastructure, retail, and manufacturing. Policy initiatives and reforms aim to create a more business-friendly environment for both domestic and foreign investors.
Space Exploration and Technology: India has made significant strides in space exploration and technology. The Indian Space Research Organisation (ISRO) has conducted successful space missions and has become a reliable partner for international satellite launches.
Renewable Energy: India is making strides in the adoption of renewable energy sources. The country has set ambitious targets for increasing the share of renewable energy in its total energy mix, contributing to global efforts to address climate change.
Global Diplomacy: India actively engages in international forums and diplomacy. The country is a member of various economic organisations and forums, contributing to discussions on global economic issues.
While India has made substantial progress, challenges such as income inequality, infrastructure development, and bureaucratic hurdles persist. The country’s role in the world economy is evolving, and ongoing economic reforms and policy initiatives will continue to shape India’s global economic standing
Key aspects of India’s role in the forex market:
Reserve Bank of India (RBI): The Reserve Bank of India, the country’s central bank, actively participates in the forex market to manage the Indian rupee’s exchange rate and maintain monetary stability. The RBI intervenes in the market through buying or selling rupees to influence its value against major currencies.
Currency Controls: India has historically implemented currency controls to manage the flow of capital in and out of the country. These controls have included restrictions on foreign exchange reserves, limits on outward remittances, and regulations on foreign investment. However, over the years, there have been efforts to liberalise and reform these controls to make the Indian forex market more open.
Foreign Exchange Reserves: India holds significant foreign exchange reserves, and its reserve position is closely monitored by the global forex community. Large reserves provide a cushion against external shocks and help stabilise the rupee. The composition of these reserves, including the allocation to different currencies and gold, can impact the forex market.
Trade Balance: India’s trade balance, which is the difference between exports and imports, influences its demand for foreign currencies. A trade deficit may lead to increased demand for foreign currencies, affecting the exchange rate of the Indian rupee.
Global Trade and Capital Flows: As a major player in the global economy, India’s trade relationships and capital flows influence its forex market. Changes in global economic conditions and international trade agreements can impact India’s forex reserves and currency values.
Rupee Exchange Rate Movements: The value of the Indian rupee against major currencies, especially the U.S. dollar, is closely watched in the forex market. Various factors, including economic indicators, interest rates, inflation, and geopolitical events, contribute to the rupee’s exchange rate movements.
Market Participants: Indian individuals and institutions, including businesses and investors, actively participate in the global forex market. Indian companies engaged in international trade, as well as investors diversifying their portfolios, contribute to forex market activity.
Forex Trading Regulations: Forex trading is regulated in India, and individuals and institutions engaging in forex trading are subject to the rules set by the RBI and the Securities and Exchange Board of India (SEBI). The regulatory framework is designed to ensure the orderly functioning of the forex market and protect market participants.
While India’s role in the global forex market is significant, it is characterised by a mix of regulatory controls and ongoing efforts to liberalize and integrate further into the global financial system. The country’s economic policies, trade dynamics, and forex market interventions collectively contribute to its role in the international currency markets.
Let’s look t some key charts…
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DXY chart:
Pulled back to the key area I’ve shown in the live sessions. Make your mind up area, but ‘m still looking for further upside. Note that the price is still above the 55 and 200.
Gold;
Struggled at a key area but also still above the 55 and 200.
Oil;
Bearish now. I think it will retest the $70 a barrel level.
Bitcoin;
Hit the area I showed in the live session perfectly. Might pullback now a little but I still think it will reach 40k.
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Red flag news:
Watch for the retail sales from the US on Wednesday (GMT +2)
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MAJORS
The DXY is at a key area, so many of the major setups are at ‘make your mind up’ areas for me. I suggest watching the video.
EUR/USD: Stuck between ema’s now, which I don’t love, but still looking for a short at around 1.073. (See video)
USD/CHF: Looking to long form 0.9080
GBP/USD: Short from 1.2400. If it breaks above this level clearly, I’d look to long.
AUD/USD: Short from 0.6600. (See the video)
NZD/USD: Short from 0.60600
USD/CAD: Long from around 1.3660
USD/JPY: Still leaving alone for now.
CROSSES
EUR/GBP: Long from 0.8650
EUR/CAD: Short from 1.4640 * See video
AUD/CAD: Short from 0.8900
GBP/AUD:1.9200 to short again. Worked almost to the pip this week.
GBP/CAD: 1.6820 to long.
GBP/CHF: See video for an update on the pattern we have been following.
AUD/NZD: If it can break below 1.0779, I’d be looking to short.
As always, remember correlation! -Especially when taking more than one JPY trade!
M3 -Shorter timeframes.
I do my analysis on daily and weekly charts first and make a note of the MAJOR areas of support and resistance. Then copy them onto Pierre’s Earth and sky template. Then I make a note of the weekly & monthly pivots points and add them to the charts. You will see lots of opportunities line up during the week. The important thing then is to select a bias for the next few days and do NOT take trades if the price is too near a trend line or pivot. Ideally, you want to buy when the price is near a major support and or pivot point line and has the potential to make at least 40 pips. Vice versa for a short.
New members, please note: If I am looking to take a trade long, for example, 1.5000, I place my order 10 pips above & 10 pips below for a short. This is because price often does not quite reach a major line and you need to allow for spreads.
We are NOT a “tipping service” our aim is to teach you how to trade for yourself.
Watch the video below for more detailed explanations of this week’s analysis and trade plan (click the 4 arrows bottom right to view full-screen)
Regards
Thinus
