The Indian Rupee (INR) faced a setback in Wednesday’s early Asian session, with strong USD demand from importers and outflows from equities weighing on the currency. Investors are now closely watching the advanced Indian August HSBC PMI data and the RBI’s MPC Minutes, set to be released on Thursday.
Despite these challenges, the INR may find support from declining crude oil prices, as India is a major oil consumer and importer. Additionally, the RBI’s potential intervention by selling USD could help stabilize the Indian Rupee.
Daily Digest Market Movers: Indian Rupee Faces Uphill Battle Amid Multiple Challenges
- The INR is down 0.2% against the USD in August, making it the worst-performing Asian currency.
- Challenges such as a widening trade deficit, foreign outflows, and USD demand from importers continue to pressure the INR.
- Market expectations of a Federal Reserve interest rate cut in September are high, with a full percentage point cut anticipated by year-end.
Technical Analysis: USD/INR Shows Bullish Bias
The USD/INR maintains a bullish outlook on the daily timeframe, supported by the key 100-day EMA. The pair is positioned above the uptrend line and the RSI indicates further upside potential. Resistance levels to watch include 84.00 and 84.24, while support levels lie at 83.77 and 83.56.
Indian Rupee FAQs
What Influences the Value of the Indian Rupee?
- External factors such as crude oil prices, USD value, and foreign investment play a significant role.
- Intervention by the RBI in FX markets and interest rate adjustments also impact the Rupee.
- Macroeconomic factors like inflation, interest rates, GDP growth, and trade balance contribute to Rupee fluctuations.
- Higher inflation can be negative for the Rupee, while higher interest rates and foreign investment inflows are positive.
Overall, the Indian Rupee’s performance is influenced by a complex interplay of domestic and international factors, making it crucial for investors to stay informed and vigilant in their strategies.