Indian Rupee Holds Steady Amidst Global Economic Uncertainty
The Indian Rupee (INR) maintains a stable position in Wednesday’s Asian session, following a recent surge to a month-high of 83.75. Despite facing pressure from expectations of a deeper Federal Reserve (Fed) rate cut and robust US Dollar sales, the INR’s decline may be capped by higher oil prices.
Fed Rate Decision and Market Expectations
Market focus shifts to the Federal Reserve’s interest rate decision on Wednesday, with anticipation of a rate cut during the September meeting. Analysts await the release of the Summary of Economic Projections, known as the ‘dot-plot,’ which could provide insights into the Fed’s future rate cut plans. Expectations of significant rate cuts may influence USD selling pressure in the short term.
Daily Digest Market Movers: Key Indicators Impacting INR
- India’s Wholesale Price Index (WPI) inflation decreased to a four-month low of 1.31% YoY in August, below market expectations.
- Merchandise trade deficit in India rose to $29.65 billion in August, according to Ministry of Commerce and Industry data.
- India’s foreign exchange reserves reached a record high of $689.2 billion as of September 6, reported by the Reserve Bank of India (RBI).
- US Retail Sales unexpectedly increased by 0.1% MoM in August, surpassing market consensus.
- Fed funds futures indicate a 63% probability of a 50 bps rate cut, up from 30% a week ago.
Technical Analysis: USD/INR Outlook
USD/INR is currently trading flat, with a bullish sentiment in the longer term. The pair remains above the key 100-day Exponential Moving Average (EMA), indicating potential upside. However, the 14-day Relative Strength Index (RSI) suggests a bearish trend, favoring sellers for now.
The resistance zone at 83.90-84.00 poses a challenge for USD/INR buyers, with potential upside barriers at 84.50. On the downside, initial support lies at 83.70, followed by the 100-day EMA at 83.64.
Indian Rupee FAQs
Understanding the factors influencing the Indian Rupee (INR) is crucial for navigating the currency’s movements:
- External factors like Crude Oil prices, USD value, and foreign investment impact the INR.
- The Reserve Bank of India (RBI) intervenes in forex markets to stabilize the exchange rate.
- Macroeconomic indicators such as inflation, interest rates, and GDP growth rate play a vital role in INR valuation.
- Higher inflation can negatively affect the currency, while increased foreign investment boosts the Rupee.