The Indian Rupee Gains Momentum in Asian Trading Session
- The Indian Rupee (INR) continues its upward trend in Tuesday’s Asian session.
- RBI’s interventions provide support to the INR, while portfolio outflows and a stronger USD could limit its gains.
- Kansas City Fed President Jeffrey Schmid is scheduled to deliver a speech later today.
The Indian Rupee (INR) is showing strength in today’s trading, boosted by the Reserve Bank of India’s (RBI) proactive measures to prevent significant depreciation of the local currency. Additionally, the recovery in crude oil prices, given India’s status as the world’s third-largest oil consumer, is lending support to the INR.
Despite these positive factors, the outflow of foreign funds and the stronger demand for the US Dollar (USD) may put some pressure on the Indian Rupee. The decline in most Asian currencies is also affecting the INR’s performance at the moment. With no major US economic data releases today, market focus will be on risk sentiment and the speech by the Federal Reserve’s Jeffrey Schmid.
Indian Rupee’s Resilience Amidst Economic Challenges
- The Sensex, India’s equity benchmark index, dropped by 0.31% to 77,339.01 points on Monday, marking a 10.05% decline from its record high in September.
- India’s foreign exchange reserves have decreased to $675.65 billion, marking the sixth consecutive weekly decline from the peak of $704 billion in late September.
- DBS Bank projects a moderation in India’s economic growth to 6.0% in 2025 and 2026, down from 8.2% in 2024.
- Moody’s Ratings forecasts a 7.2% growth rate for the Indian economy in 2024, driven by recovering household spending and easing inflation.
- The National Association of Home Builders reported a rise in the Housing Market Index to 46.0 in November, the highest level since April.
USD/INR Outlook: Positive Long-Term Prospects
The Indian Rupee is trading with strength today, maintaining a bullish outlook against the US Dollar (USD). The USD/INR pair remains above the key 100-day Exponential Moving Average (EMA) on the daily chart, with the 14-day Relative Strength Index (RSI) indicating potential support near 67.00.
Key levels to watch for in the USD/INR pair include the all-time high of 84.45 as the initial upside barrier. A breakthrough at this level could pave the way for a move towards the psychological level of 85.00.
On the downside, the 84.35 level now acts as a support, followed by 84.00 and 83.89. A breach below these levels could indicate a shift in the pair’s momentum.
Understanding the Factors Influencing the Indian Rupee
Indian Rupee FAQs
The Indian Rupee (INR) is influenced by various external factors such as crude oil prices, the value of the US Dollar, foreign investment levels, RBI interventions, and interest rate policies.
The RBI intervenes in forex markets to stabilize the exchange rate and manage inflation. Interest rate adjustments also impact the Rupee’s strength, as higher rates tend to strengthen the currency.
Macroeconomic factors like inflation, interest rates, GDP growth, trade balance, and foreign investment inflows play a significant role in shaping the Rupee’s value.
Higher inflation can negatively affect the Rupee, while higher growth rates and positive trade balances can strengthen it. Interest rate adjustments by the RBI also impact the currency’s performance.