Indian Rupee Strengthens as RBI Signals Economic Resilience and US Data Awaited

Indian Rupee

January 18, 2023

New Delhi, India

Indian Rupee Resilience Amid Global Economic Dynamics

In a recent turn of events, the Indian Rupee (INR) has shown strength against the US Dollar (USD), driven by a combination of factors that include the Reserve Bank of India’s (RBI) optimistic economic outlook and anticipation surrounding key US data releases.

RBI Governor’s Positive Signals

RBI Governor Shaktikanta Das, addressing the annual World Economic Forum (WEF) in Davos, Switzerland, indicated that inflation in India is moderating and is steadily approaching the central bank’s 4% target. Despite global challenges, Das expressed confidence in the robust growth prospects of the Indian economy. He highlighted the effective impact of monetary policy, stating that core inflation is on a steady decline.

Market Sentiment and Ratings

Fitch Ratings affirmed India’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘BBB-‘ with a stable outlook. The National Statistical Office’s estimate of a 7.3% economic growth in FY2024 further adds to the positive sentiment surrounding the Indian economy.

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US Data and Global Market Watch

Investors are keeping a close eye on upcoming US data releases, including Housing Starts, Building Permits, Initial Claims, and the Philly Fed Manufacturing Index. The recent 0.6% MoM rise in US Retail Sales in December, surpassing expectations, has contributed to a shift in market expectations regarding potential rate cuts.

Technical Analysis: INR/USD Pair Insights

Technically, the USD/INR pair has traded within the range of 82.80 to 83.40. The recent bounce back above the key 100-period Exponential Moving Average (EMA) on the daily chart signals a shift towards bullish sentiment. The Relative Strength Index (RSI) returning above the 50.0 midpoint suggests potential buyer control in the near term.

Looking Ahead

As market participants await further developments, key resistance levels for the USD/INR pair include 83.40 and the 2023 high of 83.47. On the downside, support levels are identified at 83.00, followed by 82.80 and 82.60.

In summary, the Indian Rupee‘s recent resilience against the US Dollar is influenced by positive signals from the RBI, strong economic fundamentals, and global market dynamics. The upcoming US data releases and continued monitoring of technical indicators are expected to guide future currency movements.

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