The Indian Rupee (INR) remains stable against the US Dollar (USD) as traders anticipate intervention from the Reserve Bank of India (RBI) to support the domestic currency and prevent it from weakening beyond the 84.00 level.
If Asian markets experience a decline due to concerns about the US economy, the USD/INR pair could appreciate in the short term. However, lower oil prices may offset some of the downward pressure on the INR, benefiting India as a major oil consumer and importer.
Meanwhile, the US Dollar gains support as doubts arise regarding the magnitude of the Federal Reserve’s rate cut in September. The likelihood of a 50 bps rate cut has slightly decreased to 29.0%, according to the CME FedWatch Tool.
Key Market Updates: INR Holds Ground Amid Potential RBI Intervention
- Chicago Fed President Austan Goolsbee’s comments align with market sentiment, indicating an impending policy rate adjustment by the US central bank.
- India’s FX Reserves reach a record high, driven by foreign exchange influx and inclusion in JPMorgan’s emerging market debt index.
- US private-sector employment increases in August, while initial jobless claims decline.
- India’s Composite PMI shows strong growth in August, with increased business activity in the service sector.
- The World Bank raises India’s growth forecast for the current financial year to 7%.
Technical Analysis: USD/INR Consolidates Below 84.00
The USD/INR pair trades near 84.00, consolidating within a symmetrical triangle pattern on the daily chart. The RSI remains bullish above 50, while the nine-day EMA acts as immediate support at 83.91. A breakout above 84.00 could push the pair towards its all-time high of 84.14.
USD/INR: Daily Chart
Indian Rupee FAQs
- Factors Affecting INR: External factors like Crude Oil prices, USD value, foreign investment, RBI intervention, and interest rates impact the Indian Rupee.
- RBI’s Role: The RBI intervenes to stabilize the exchange rate and inflation, which influences interest rates and Rupee strength.
- Macroeconomic Influences: Factors like inflation, GDP growth, trade balance, and foreign investment impact the Rupee’s value.
- Inflation Impact: Higher inflation can devalue the Rupee but may lead to higher interest rates, attracting international investors.
Analysis Breakdown:
The Indian Rupee is holding its ground against the US Dollar, supported by potential RBI intervention and favorable macroeconomic indicators. Traders should monitor market developments and geopolitical events to make informed investment decisions. Additionally, understanding the key factors influencing currency movements, such as oil prices, economic growth, and central bank policies, can help individuals navigate the volatile forex market effectively.