The Indian Rupee (INR) is facing downward pressure in Wednesday’s early Asian session, despite the weakening of the US Dollar (USD). Factors such as higher crude oil prices and risk aversion in the markets have weighed on investor sentiments, leading to a decline in the value of the INR. Additionally, escalating geopolitical tension in the Middle East has limited the local currency’s upside potential.
The Reserve Bank of India (RBI) is expected to intervene by selling USD to stabilize the INR and prevent further depreciation. Market participants will closely monitor India’s Wholesale Price Index (WPI) inflation and reports on Fuel and Food for July. On the US front, the Consumer Price Index (CPI) will provide insight into the interest rate outlook.
Key Market Updates: Indian Rupee Weakens Ahead of WPI Report
- The Indian Wholesale Price Index (WPI) inflation is projected to ease from 3.36% YoY in June to 2.39% in July.
- India and Russia are exploring the establishment of a direct Rupee-Ruble exchange rate for trade, bypassing the USD due to Western sanctions on Moscow.
- The US Producer Price Index (PPI) for final demand in July was softer than expected, indicating a 2.2% YoY increase compared to 2.7% in June.
- The core PPI, excluding food and energy prices, rose 2.4% YoY in July, lower than the market consensus of 2.7%.
- Atlanta Fed President Raphael Bostic is cautious about lowering interest rates, awaiting more data for a decision.
Technical Analysis: USD/INR Shows Continued Bullish Bias
The Indian Rupee is trading weaker, with the USD/INR pair maintaining a positive outlook on the daily chart. The pair remains above the key 100-day Exponential Moving Average (EMA) and an uptrend line established over two months. The 14-day Relative Strength Index (RSI) also indicates bullish momentum, hovering around 60.50.
If the USD/INR pair surpasses the 84.00 psychological level, it could signal further upside towards the record high of 84.24. On the downside, support is seen at the 83.85 uptrend line, with a break potentially leading to the 100-day EMA at 83.53.
US Dollar Performance Against Major Currencies Today
The table below displays the percentage change of the US Dollar (USD) against major currencies, highlighting its strength and weakness in today’s market.
Understanding the factors influencing the Indian Rupee is crucial for investors. External factors such as crude oil prices, USD value, and RBI interventions impact the Rupee’s value. Monitoring inflation, interest rates, economic growth, and trade balance can help in making informed financial decisions.