July 23, 2024
New Delhi, India
Rupee Analysis
The Indian Rupee (INR) has shown signs of recovery in early Tuesday trading, bouncing back after reaching an all-time low in the previous session. This improvement comes on the heels of India’s Finance Minister Nirmala Sitharaman’s presentation of the Union Budget 2024-25, which has sparked optimism in the markets.
Union Budget Highlights: Finance Minister Nirmala Sitharaman delivered her seventh consecutive Union Budget, emphasizing tax reforms and job creation. The Budget aims to boost consumption in the economy, which has been positively received by market participants. Key allocations include ₹1.52 trillion for agriculture and allied sectors, ₹2.66 trillion for rural development, and ₹2 trillion ($24 billion) for job creation over the next five years. Additionally, incentives will be provided to both employees and employers in the manufacturing sector.
Market Reactions and Influences: The INR’s rise is supported by persistent foreign inflows into Indian equity markets and a decline in crude oil prices, which are beneficial for the currency. However, challenges remain, including a weak Chinese Yuan and sustained US Dollar (USD) demand from local corporates and oil companies. Despite these challenges, the Reserve Bank of India (RBI) is expected to intervene to prevent excessive depreciation of the INR.
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Upcoming US Economic Data: Investors are also keenly awaiting several key US economic data releases this week, which could influence the INR’s performance. These include Tuesday’s US Existing Home Sales and Richmond Fed Manufacturing Index, followed by the preliminary US S&P Global Purchasing Managers Index (PMI) for July, Q2 GDP figures, and the Personal Consumption Expenditures (PCE) Price Index for June, scheduled for release on Wednesday, Thursday, and Friday, respectively.
The Indian Rupee’s recent gains reflect a combination of positive domestic developments and strategic market interventions. While challenges remain, the overall outlook for the INR appears cautiously optimistic, bolstered by strong budgetary measures and favorable economic projections. Investors will continue to monitor both domestic policies and international economic indicators to gauge the INR’s trajectory in the near term.
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