Indian Rupee Weakens in Tuesday’s Asian Session
- The INR faces selling pressure as Trump’s tariff promise boosts the USD.
- FOMC Minutes set to be the highlight on Tuesday.
In today’s trading session, the Indian Rupee (INR) is experiencing some downward pressure following a recent peak in strength lasting over two weeks. This decline is primarily attributed to increased demand for the US Dollar (USD), driven by robust US economic indicators, growing tensions in the Russia-Ukraine conflict, and President-elect Donald Trump’s proposal of new tariffs.
Despite these challenges, the INR may find support from various factors such as inflows from MSCI’s index rebalancing, decreasing US bond yields, and lower crude oil prices. Investors are eagerly awaiting the release of the FOMC Minutes later today, along with key US economic data including Consumer Confidence, New Home Sales, the Richmond Fed Manufacturing Index, and the Dallas Fed Services Index.
Indian Rupee Remains Weak Despite Inflows from MSCI’s Index Rebalancing
- Indian equities are expected to receive passive inflows of approximately $2.5 billion due to the rebalancing of MSCI’s equity indexes.
- Amit Pabari, managing director at CR Forex, predicts the dollar-rupee pair to trade within a defined range with support at 83.80 and resistance around 84.50.
- Key statements from Chicago Fed President Austan Goolsbee and Minneapolis Fed President Neel Kashkari suggest a cautious approach towards interest rate policy in the US.
- Market sentiment indicates reduced expectations for an interest rate cut in December, with futures traders pricing in a 55.9% chance of a quarter-point reduction.
USD/INR’s Longer-Term Constructive Bias is Under Pressure
Despite maintaining a bullish outlook above the key 100-day Exponential Moving Average (EMA), the USD/INR pair has broken below an ascending trend channel. The 14-day Relative Strength Index remains supportive for buyers in the near term.
While facing resistance at the 84.52 level, a breakthrough could lead to the psychological barrier of 85.00. Conversely, support lies in the 84.00-83.90 range, with a breach potentially exposing 83.65 as the next key level.
Overall, the Indian Rupee’s performance in today’s market reflects the influence of both domestic and international factors, highlighting the interconnected nature of global financial markets.