December 2, 2024
New Delhi, India
USDINR Analysis
The Indian Rupee (INR) faced renewed selling pressure on Monday, extending losses from its previous session’s all-time low. Weak domestic GDP data and global economic factors, including renewed strength in the US Dollar (USD), weighed heavily on the currency.
India’s real GDP growth fell to a seven-quarter low of 5.4% in the July-September quarter, missing the Reserve Bank of India’s (RBI) forecast of 6.8%. This slowdown, coupled with unabated portfolio outflows, added to the challenges faced by the INR.
Trump’s Tariff Warning Adds to Global Tensions
US President-elect Donald Trump stirred concerns by threatening 100% tariffs on BRICS nations, including India, if they moved forward with plans to develop a common currency to replace the USD. This announcement comes amid India’s cautious steps toward de-dollarization, even as the US recently became its leading trading partner.
Market Expectations and Upcoming Data Releases
Investors are closely watching the HSBC India Manufacturing Purchasing Managers’ Index (PMI) for November, projected to ease slightly to 57.3 from 57.5 in October. On the US front, the ISM Manufacturing PMI, expected to improve to 47.5 for November, will also play a key role in setting market sentiment.
The Reserve Bank of India’s upcoming interest rate decision on Friday is another critical event. Analysts at Goldman Sachs anticipate a pause in the repo rate, despite slower growth, citing elevated inflation and global uncertainties.
Challenges Ahead for the Rupee
Persistent foreign fund outflows and a challenging global economic environment have left the INR vulnerable. With weak macroeconomic data and rising geopolitical tensions, market participants remain cautious about the Rupee’s near-term trajectory.
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