The Indian Rupee (INR) faced a major setback on Monday as it hit an all-time low, driven by a combination of factors including the risk-off sentiment, significant foreign outflows, and high demand for the US Dollar (USD). The current sell-off in the INR is further exacerbated by the dovish stance of the Federal Open Market Committee (FOMC) and weaker US employment data for July. However, with the Reserve Bank of India (RBI) expected to intervene in the foreign exchange market, there may be some stabilization in the INR’s value.
Investors are closely watching the US ISM Services Purchasing Managers Index (PMI) data for July, as well as the RBI’s upcoming interest rate decision. With the USD/INR pair maintaining a bullish bias, technical analysis suggests potential upside for the pair, with key resistance levels at 84.00 and 83.85. On the downside, support levels to watch include 83.75 and 83.51.
Market Highlights: What’s Moving the Indian Rupee
- Indian HSBC Services PMI for July came in weaker than expected at 60.3, indicating a slight slowdown in service sector activity.
- US Nonfarm Payrolls (NFP) data for July showed a lower-than-expected increase of 114K jobs, while the Unemployment Rate rose to 4.3%.
- Financial markets are pricing in a 74% chance of a 50 basis-point cut by the Fed in September.
Technical Analysis: USD/INR Outlook
The USD/INR pair remains bullish, supported by the 100-day Exponential Moving Average (EMA) and an uptrend line on the daily chart. The Relative Strength Index (RSI) suggests further upside potential, with resistance levels at 84.00 and 83.85. Support levels to watch include 83.75 and 83.51.
US Dollar Performance Today
The US Dollar (USD) saw mixed performance against major currencies today, with the Japanese Yen emerging as the strongest performer. The heat map below shows percentage changes in USD against listed currencies.
Indian Rupee FAQs
- Factors influencing the value of the Indian Rupee include external factors like Crude Oil prices, US Dollar value, and foreign investment levels.
- The Reserve Bank of India (RBI) intervenes in forex markets to stabilize the exchange rate and adjusts interest rates to control inflation.
- Macroeconomic factors like inflation, interest rates, GDP growth, trade balance, and foreign investment inflows also impact the Rupee’s value.
- Higher inflation can be negative for the Rupee, while higher interest rates and foreign investment inflows are positive factors.
Overall, the Indian Rupee’s current challenges stem from a combination of external and domestic factors. Investors should closely monitor key economic indicators and central bank interventions to gauge the currency’s future performance. Understanding the impact of global events on the Rupee’s value can help individuals make informed decisions about their finances and investments.