The Indian Rupee (INR) is showing mild gains in Friday’s trading session, supported by the dovish remarks from the US Federal Reserve (Fed) and lower crude oil prices. The Reserve Bank of India (RBI) intervention is also helping to underpin the INR and prevent it from breaching key levels.
Investors are keeping a close eye on Fed Chair Jerome Powell’s speech today, as it could provide valuable insights into the future US interest rate trajectory. The overall sentiment remains positive for the INR, but challenges such as Greenback demand from importers and foreign fund outflows persist.
Key Market Updates Affecting the Indian Rupee
- The RBI highlights the importance of maintaining an actively disinflationary policy to anchor inflation.
- Headline inflation in India has increased to 5.1% in June due to food inflation pressures.
- HSBC India Manufacturing PMI declines slightly in August, while services PMI shows improvement.
- US PMI data indicates a mixed picture, with slight declines in manufacturing and improvements in services.
- Fed officials signal potential rate cuts in the upcoming meetings, with market expectations at 76% for a 25 bps cut in September.
Technical Analysis: USD/INR Outlook
The USD/INR pair continues to trade in an uptrend, supported by the 100-day EMA and RSI indicating bullish momentum. Resistance levels to watch include 84.00 and 84.24, while support levels are at 83.92 and 83.77.
Understanding the Indian Rupee: FAQs
- The INR is highly sensitive to external factors like crude oil prices, USD value, foreign investment, and RBI interventions.
- RBI plays a key role in maintaining exchange rate stability and inflation control through interest rate adjustments.
- Macroeconomic factors such as inflation, interest rates, GDP growth, trade balance, and foreign investment inflows impact the INR’s value.
- Higher inflation can negatively affect the currency, while higher interest rates and positive economic indicators can strengthen it.