August 23, 2024
New Delhi, India
USDINR Today
The Indian Rupee (INR) saw gains during Friday’s early European session, buoyed by dovish signals from the US Federal Reserve (Fed), a decline in crude oil prices, and potential intervention by the Reserve Bank of India (RBI). Despite these positive factors, market participants remain cautious ahead of Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium later today.
Supportive Factors for INR: The INR attracted buying interest as the Fed’s dovish minutes from its recent meeting suggested a potential easing in the future US interest rate path. Additionally, a drop in crude oil prices provided further support to the INR, as India is a significant importer of oil. Traders also anticipate that the RBI might step in to sell USD to prevent the INR from breaching the critical 84.00 level, limiting the downside risk for the local currency.
Challenges Ahead: Despite the supportive factors, the INR faces headwinds from sustained demand for the US Dollar (USD) by importers and ongoing foreign fund outflows. These factors could dampen investor sentiment and exert downward pressure on the Indian Rupee. The market’s attention is now focused on Jerome Powell’s upcoming speech, which could offer crucial insights into the Fed’s future monetary policy and impact the USD/INR exchange rate.
CDSL Shares Surge Over 6% as Stock Trades Ex-Bonus Following 1:1 Issue
Market Movements and Economic Indicators: In its recent release, the RBI emphasized the need for an actively disinflationary policy stance to anchor inflation around its target level. The central bank highlighted that headline inflation rose to 5.1% in June, driven by increased food prices, despite subdued core inflation and deflation in the fuel group.
On the economic front, India’s preliminary HSBC Manufacturing PMI slightly declined to 57.9 in August from 58.1 in July, while the Services PMI edged up to 60.4 from 60.3 in the same period. In contrast, the US S&P Global Composite PMI dipped to 54.1 in August from 54.3 in July, with the Manufacturing PMI falling to 48 and the Services PMI rising to 55.2.
Federal Reserve Insights: Comments from Federal Reserve officials added to the dovish sentiment. Boston Fed President Susan Collins indicated that a rate cut might soon be appropriate, depending on incoming economic data. Similarly, Kansas City Fed President Jeff Schmid emphasized the importance of monitoring unemployment dynamics before deciding on a potential rate cut next month.
Currently, market participants are pricing in a 76% probability of a 25 basis points (bps) rate cut by the Fed in its September meeting, according to the CME FedWatch Tool.
Disclaimer:
CurrencyVeda provides this news article for informational purposes only. We do not offer investment advice or recommendations. Before making any investment decisions, please conduct thorough research, consult with financial experts, and carefully consider your financial situation, risk tolerance, and investment goals. Investing in the stock market carries risks, and it’s essential to make informed choices based on your individual circumstances. CurrencyVeda is not liable for any actions taken based on the information provided in this article.
