September 17, 2024
New Delhi, India
Rupee Analysis
The Indian Rupee (INR) weakened in Tuesday’s Asian session, ending a three-day winning streak as strong US Dollar (USD) demand from local importers, especially oil companies, pressured the currency. With India being the world’s third-largest oil consumer, the recent rebound in crude oil prices also limited the INR’s upside.
Key Factors Influencing INR Movement:
- USD Demand: Renewed demand for the US Dollar from local importers, particularly oil firms, exerted downward pressure on the INR.
- Crude Oil Prices: Rising oil prices, a key factor given India’s heavy reliance on oil imports, further contributed to the rupee’s decline.
- Fed Rate Cut Expectations: Despite the rupee’s slide, expectations of a jumbo Federal Reserve rate cut may cap its downside, as market participants anticipate a potential 50 basis point (bps) cut, up from earlier expectations of 25 bps.
- Foreign Fund Inflows: Significant foreign investment in Indian equities continues to offer some support to the local currency.
Key Data to Watch:
- Indian WPI Inflation: Investors will be closely watching India’s Wholesale Price Index (WPI) Inflation for August, which is expected to ease to 1.80% YoY from 2.04% in July.
- US Retail Sales: The US Retail Sales report is due later on Tuesday and is forecasted to rise 0.2% MoM in August, following a 1.0% increase in July.
Broader Economic Context:
- India’s Economic Growth: According to RBI Governor Shaktikanta Das, India’s economy is projected to grow at around 7.5% or more, surpassing the RBI’s forecast of 7.2% for the current financial year.
- US Manufacturing Index: The NY Empire State Manufacturing Index improved to 11.5 in September from -4.7 in August, beating expectations of a 3.9% decrease.
With global market dynamics and key economic data releases in focus, the Rupee may experience further volatility, though the potential for a larger US Fed rate cut and continued foreign inflows could provide some cushion against significant losses.
Disclaimer:
CurrencyVeda provides this news article for informational purposes only. We do not offer investment advice or recommendations. Before making any investment decisions, please conduct thorough research, consult with financial experts, and carefully consider your financial situation, risk tolerance, and investment goals. Investing in the stock market carries risks, and it’s essential to make informed choices based on your individual circumstances. CurrencyVeda is not liable for any actions taken based on the information provided in this article.
