Indian Rupee Strengthens in Wednesday’s Asian Session
- Improved Risk Appetite and Weakening USD Support INR
- Investors Anticipate US New Home Sales Data and Fed Speech
On Wednesday, the Indian Rupee (INR) sees an uptick in value. This rise can be attributed to improved risk appetite fueled by China’s stimulus measures and a softer US Dollar (USD). However, factors such as increasing crude oil prices, outflows related to FTSE equity index adjustments, and heightened USD demand from large Indian importers may exert some downward pressure on the INR.
Traders are closely monitoring the US New Home Sales data for August and awaiting Fed Governor Adriana Kugler’s speech. Any dovish comments from Fed officials could impact the USD-INR exchange rate. Additionally, the release of the US August Personal Consumption Expenditures (PCE) Price Index data later in the week will be a significant market event.
Daily Digest Market Movers: Indian Rupee Resilient Amid Global Risk-On Sentiment
- S&P Global Ratings maintains India’s GDP growth forecast at 6.8% and suggests a potential interest rate cut by the Reserve Bank of India (RBI) in October.
- Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, expects the INR to trade positively driven by global risk appetite and USD weakness. However, high crude oil prices may limit significant gains.
- The US Consumer Confidence Index experienced a notable decline in September, indicating weakening consumer sentiment.
- Fed Governor Michelle Bowman highlights persistently high inflation levels, emphasizing caution in rate-cut decisions. Market expectations lean towards a 50 bps rate cut in the upcoming Fed meeting.
- The CME FedWatch Tool indicates a 56% probability of a 50 bps rate cut in November, with a 44% chance of a 25 bps cut.
Technical Analysis: USD/INR Shows Bearish Bias in Long-Term Outlook
Despite the INR’s current strength, the USD/INR pair maintains a negative trajectory. The price remains below the key 100-day Exponential Moving Average (EMA) on the daily chart, supported by a downward momentum indicated by the 14-day Relative Strength Index (RSI).
Key levels to watch for the USD/INR pair:
- Immediate downside target at 83.44, followed by crucial support at 83.00.
- Resistance at 83.75 and a major barrier at 84.00.
Indian Rupee FAQs
For those curious about the factors influencing the Indian Rupee (INR), here are some FAQs:
The INR’s value is impacted by factors such as Crude Oil prices, USD strength, foreign investment levels, RBI interventions, and interest rates.
The RBI intervenes in forex markets to stabilize the exchange rate and adjusts interest rates to manage inflation levels, influencing the INR’s performance.
Macroeconomic factors like inflation, GDP growth, trade balance, and foreign investment inflows play a significant role in determining the Rupee’s strength.
Higher inflation can devalue the currency, while higher interest rates and positive economic indicators boost the Rupee’s value.