December 9, 2024
New Delhi, India
USDINR Analysis
Rupee (INR) begins the week on a weaker note in Monday’s Asian session trading above 84.7 levels. The currency is facing pressure from several factors, including the strength of the US Dollar (USD), the weakening Chinese Yuan, and concerns about domestic economic growth.
Key Factors Impacting INR
- USD Strength and Import Demand
- Renewed demand for the USD from importers and local oil companies added to the Rupee’s weakness.
- A stronger USD globally continues to exert downward pressure on the INR.
- Growth Concerns
- Concerns over slowing domestic growth are weighing on market sentiment.
- Traders are keeping a close eye on upcoming Indian CPI inflation data, which could influence market outlook.
- RBI Intervention
- Despite the weakness, expectations of foreign exchange market intervention by the Reserve Bank of India (RBI) could cap INR losses.
- Increased government spending may also provide some support to the Rupee.
Global Factors in Focus
- US CPI Data
- Scheduled for Wednesday, the US November CPI report is anticipated to rise to 2.7% YoY from 2.6% in October.
- This data is critical ahead of the Federal Reserve’s potential third consecutive rate reduction.
- US Labor Market Insights
- November Nonfarm Payrolls (NFP) showed a robust increase of 227,000 jobs, surpassing expectations of 200,000.
- Unemployment ticked up to 4.2%, while wage inflation remained steady at 4.0% YoY.
RBI’s Stance on Inflation
During its October meeting, the RBI maintained the benchmark repo rate at 6.50%. RBI Governor Shaktikanta Das emphasized the importance of durable price stability as a foundation for sustainable growth, reaffirming the central bank’s commitment to balancing inflation and growth dynamics.
Outlook
As markets prepare for key inflation data from the US and India this week, the Rupee’s trajectory will depend on both global cues and domestic economic developments. Traders are also closely watching the Federal Reserve’s rate decision on December 17-18, with markets pricing in an 85.1% probability of a 25 bps rate cut.
USDINR was hovering around 84.731 up +0.058(+0.07%) by 9:44 AM IST today.
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