December 31, 2024
New Delhi, India
USDINR Today
Rupee (INR) extended its losses on Tuesday, following its weakest closing level in the previous session. Persistent selling pressure on the local currency is driven by global factors such as the weakening offshore Chinese Yuan and strong US Dollar demand.
Additionally, expectations of prolonged higher interest rates by the US Federal Reserve, tepid capital inflows, and concerns about US tariff policies under President-elect Donald Trump have further weighed on the INR.
RBI Intervention and Economic Data in Focus
The Reserve Bank of India (RBI) is anticipated to intervene in non-deliverable forward (NDF) markets to curb sharp depreciation of the Rupee. Despite this, the INR remains vulnerable amid subdued trading volumes in a holiday-shortened week.
Market participants are awaiting key economic data, including India’s Federal Fiscal Deficit for November and the Trade Deficit for Q3, which are expected later on Tuesday.
Current Account Deficit and Outlook
India’s Current Account Deficit (CAD) is projected to hold steady at 1.1% of GDP for FY 2024-25, as per ICICI Bank’s report. Treasury experts forecast the dollar-rupee pair to trade within the range of 85.30–85.60, with buying interest seen at lower levels.
Global Market Influences
- US Data Highlights:
- US Pending Home Sales rose 2.2% in November, exceeding market expectations of 0.7%, signaling resilience in the housing market.
- The Chicago PMI fell to 36.9 in December, below the expected 42.5, highlighting weakening economic activity in the region.
- FPI Outflows:
Foreign portfolio investors sold over $10 billion worth of Indian stocks and bonds this quarter, reflecting reduced risk appetite.
Early European Trade Session
During Tuesday’s early European session, the Rupee traded in negative territory as a stronger US Dollar and the weakening Chinese Yuan pressured the currency further. A slower-than-expected pace of Federal Reserve rate cuts also added to the Rupee’s struggles.
With year-end market activity winding down, traders remain cautious, focusing on upcoming economic indicators and the RBI’s moves to stabilize the currency.
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