The Indian Rupee’s Performance in Monday’s Asian Session
- The Indian Rupee holds steady in Monday’s Asian session.
- Significant foreign outflows and Trump trades might drag the INR lower.
- The Fed’s Goolsbee is set to speak later on Monday.
In the Asian session on Monday, the Indian Rupee (INR) maintained its stability amidst a slight decline in the US Dollar (USD). However, factors such as renewed demand for the Greenback from investors and the weakening of the Chinese Yuan could exert pressure on the local currency in the near future. Additionally, continuous foreign fund outflows are contributing to the downward trend of the INR.
The Reserve Bank of India (RBI) has been intervening regularly by selling USD to support the Indian Rupee, although this has led to a decrease in India’s forex reserves. With no major economic data releases from India or the US scheduled for Monday, market focus will be on risk sentiment and the upcoming speech by US Federal Reserve (Fed) official Austan Goolsbee.
Indian Rupee Outlook and Economic Projections
- The Indian Rupee is forecasted to trade at 84.5 per US Dollar by the end of December this year, according to a Business Standard poll.
- Moody’s Ratings projects the Indian economy to grow by 7.2% in 2024, driven by a gradual recovery in household spending and easing inflation pressures. Growth rates of 6.6% and 6.5% are expected in 2025 and 2026, respectively.
- “We remain negative on the outlook for Asian FX through H1 2025, given the potential negative economic impact of likely US tariff hikes,” noted MUFG Bank in a recent statement.
- In October, US Retail Sales increased by 0.4%, surpassing the expected 0.3% rise. This data, released by the Commerce Department’s Census Bureau, indicates a positive trend in consumer spending.
- Recent comments from Chicago Fed President Austan Goolsbee and Boston Fed President Susan Collins hint at potential rate adjustments by the Fed in the near future.
USD/INR Pair Analysis and Price Levels
While the Indian Rupee remains flat in trading, the USD/INR pair’s long-term uptrend persists as it remains above the key 100-day Exponential Moving Average (EMA) on the daily chart. However, the 14-day Relative Strength Index (RSI) indicates an overbought condition, suggesting the possibility of consolidation before any further USD/INR appreciation.
Key price levels to watch include 84.50 as resistance and 84.35 as initial support. A break above 84.50 could lead to further gains towards 85.00, while a breach below 84.35 may push the pair down to 84.00 and eventually 83.88, the 100-day EMA.
Indian Rupee FAQs
For those curious about the factors influencing the Indian Rupee’s value, here are some frequently asked questions:
What factors influence the value of the Indian Rupee?
- The price of Crude Oil, the value of the US Dollar, foreign investment levels, and RBI interventions all play a significant role in determining the Rupee’s value.
How does the Reserve Bank of India impact the Rupee?
- The RBI intervenes in forex markets to stabilize the exchange rate and adjusts interest rates to manage inflation, which in turn affects the Rupee’s strength.
What macroeconomic factors affect the Rupee?
- Inflation, interest rates, GDP growth, balance of trade, and foreign investment inflows all influence the Rupee’s value. Positive growth and investment inflows tend to strengthen the Rupee.
How does inflation impact the Indian Rupee?
- Higher inflation can lead to currency devaluation, while lower inflation may result in increased demand for the Rupee from international investors.