The Indian Rupee may appreciate against the US Dollar as recent economic data from the US reinforces the likelihood of an aggressive rate cut by the Federal Reserve next week. The CME FedWatch Tool indicates a sharp increase in the probability of a 50 basis point rate cut, now at 41.0%.
In India, the Consumer Price Index for August came in slightly higher than expected at 3.65%, driven by a surge in vegetable prices. This exceeded the anticipated 3.55% and July’s 3.54% readings.
Traders speculate that the Reserve Bank of India (RBI) intervened in the open markets to prevent the Rupee from weakening beyond 84.00. Market participants await the release of Trade Deficit Government and FX Reserves data on Friday.
Daily Digest Market Movers: Indian Rupee Strengthens on Improved Risk Sentiment
- RBI Governor Shaktikanta Das predicts India’s growth potential to be 7.5% or higher, exceeding the central bank’s forecast for 2024.
- US Producer Price Index (PPI) rose to 0.2% in August, surpassing expectations, while core PPI accelerated to 0.3% month-on-month.
- US Initial Jobless Claims for the week ended September 6 met expectations at 230K.
- India’s Industrial Output increased by 4.8% in July, slightly above market forecasts.
- India considers relaxing investment rules for Chinese firms to boost its manufacturing sector.
- US Consumer Price Index dipped to 2.5% year-on-year in August, below expectations.
- The first US presidential debate focused on economic policies.
Technical Analysis: USD/INR Breaks Below Symmetrical Triangle
The USD/INR pair trades around 83.90, with a bearish bias evident after breaking below a symmetrical triangle pattern. The 14-day RSI suggests a potential retest of the triangle pullback.
Key levels to watch include 83.72 and 83.50 on the downside, while resistance lies at 83.91 and 83.95. A breakout above 84.00 could push the pair towards the record high of 84.14.
USD/INR: Daily Chart
Indian Rupee FAQs
- External factors like Crude Oil prices, US Dollar value, and foreign investment influence the Indian Rupee.
- RBI intervenes in forex markets to maintain exchange rate stability and adjusts interest rates to control inflation.
- Macroeconomic factors such as inflation, interest rates, GDP, trade balance, and foreign investment impact the Rupee’s value.
- Higher inflation can be negative for the currency, while lower inflation may lead to increased demand from international investors.