October 7, 2024
New Delhi, India
USDINR Today
The Indian Rupee (INR) showed some recovery on Monday after recent losses. However, a stronger US Dollar (USD), heightened foreign fund outflows, and rising crude oil prices continue to weigh on the currency. Traders are closely monitoring Fedspeak scheduled for later in the day for fresh market direction.
Fedspeak and RBI in Focus
Any dovish comments from US Federal Reserve (Fed) officials may drag the USD lower, which could support the INR. However, until further clarity emerges, the INR may remain under pressure.
Looking ahead, the Reserve Bank of India’s (RBI) interest rate decision on Wednesday will be in the spotlight. The RBI is expected to keep its benchmark interest rate unchanged, given the elevated retail inflation levels.
Key Economic Indicators
India’s economic indicators provide additional context:
- The HSBC India Services Purchasing Managers Index (PMI) for September fell to a 10-month low of 57.7, down from 60.9 in August, missing market expectations of 58.9. Despite this decline, the PMI remains well above its long-term average, reflecting resilience in the services sector.
- In the US, key economic data continues to influence market sentiment:
- The Unemployment Rate ticked lower to 4.1% in September from 4.2% in August.
- Nonfarm Payrolls (NFP) rose to 254,000 in September, significantly above the revised August figure of 159,000 and market expectations of 140,000.
- Average Hourly Earnings increased to 3.8% in September from 3.6% in August.
Market Outlook
With the US economy showing signs of strength, including robust employment data, traders will be watching for any Fed commentary that could impact global markets. The INR’s trajectory will depend on both international and domestic developments, particularly the RBI’s stance on inflation and interest rates in the coming week.
Pranjul Bhandari, Chief India Economist at HSBC, commented, “The headline business activity index fell below 60 for the first time in 2024, but we note that at 57.7, it was still much above the long-term average.” This indicates that while there’s some slowdown, the Indian economy remains on solid footing.
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