December 21, 2023
New Delhi, India
INR
The Indian Rupee (INR) faces downward pressure as the Reserve Bank of India (RBI) issues a stern warning on inflation, impacting its outlook. Simultaneously, attention turns to the US for key economic data.
Inflation Woes for INR:
The RBI’s monthly bulletin emphasizes the urgency of curbing headline retail inflation, which soared to 5.55% in November, surpassing market expectations. RBI Governor Shaktikanta Das underscores the need for sustained 4% inflation, cautioning on its potential impact on growth.
US Economic Indicators in Focus:
Investors eagerly await the US Gross Domestic Product Annualized (Q3) figures, projected to hold steady at 5.2%. Attention also shifts to the Core PCE Price Index in November, adding to market anticipation.
Global Reserves and Reclassification:
India’s foreign exchange reserves rise to $606.9 billion, ranking fourth globally. The International Monetary Fund (IMF) reclassifies India’s exchange rate regime, signaling stability.
US Consumer Confidence and Housing Market Surge:
US consumer confidence registers a notable increase in December, reflecting a positive sentiment not seen since early 2021. Additionally, the annual rate of Existing Home Sales surpasses market consensus in November.
Fed’s Jan Outlook and Market Expectations:
Market expectations hint at the Federal Reserve maintaining its benchmark rate in January but foresee the possibility of rate cuts as early as March, according to the CME FedWatch Tool.
Technical Analysis for USD/INR:
The USD/INR pair remains range-bound between 82.80 and 83.40 since September. Technical indicators suggest challenges as the RSI hovers below the 50.0 midpoint, emphasizing potential shifts in the currency pair’s trajectory.
Closure:
The INR’s vulnerability, driven by inflation concerns, is juxtaposed with global economic indicators and the evolving narrative in the US. Traders are advised to closely watch these factors for potential shifts in the currency market.
Also Check Indian Rupee vs Dollar Analysis
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