September 25, 2024
New Delhi, India
USDINR Analysis Today
The Indian Rupee (INR) strengthened on Wednesday amid improved global risk sentiment following China’s stimulus measures and a softer US Dollar (USD). Despite this support, rising crude oil prices and outflows due to the FTSE index rejig could weigh on the local currency.
Key Economic Data and Fed Signals
Investors are closely monitoring the US New Home Sales data for August, which is set to release later in the day, and remarks from US Federal Reserve Governor Adriana Kugler. Any dovish tone from the Fed could put further pressure on the USD against the INR.
The most anticipated event of the week is the release of the US August Personal Consumption Expenditures (PCE) Price Index on Friday, which could provide additional cues for the markets.
Also Read: India’s Business Activity Growth Slows in September: HSBC Flash PMI Report
US Consumer Confidence Dips; Fed Rate Cut Outlook
The US Conference Board’s Consumer Confidence Index dropped sharply to 98.7 in September, down from 105.6 in August, marking the biggest decline since August 2021. This reflects a significant weakening in consumer sentiment.
Meanwhile, markets are now pricing in a 56% chance of a second 50 basis point (bps) rate cut by the Fed in November, with a 44% probability of a 25 bps cut, according to the CME FedWatch Tool.
Fed Governor Michelle Bowman indicated that inflation remains “uncomfortably above” the 2% target, supporting the need for caution. However, she signaled a preference for a quarter-point cut, aligning with more traditional central bank policy moves.
S&P Global Maintains India’s Growth Forecast
On the domestic front, S&P Global Ratings maintained its forecast for India’s GDP growth at 6.8%, while hinting that the Reserve Bank of India (RBI) may opt for a rate cut as early as October.
USDINR was trading at 83.52 down -0.05% at 10:24 IST.
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