January 3, 2025
New Delhi, India
USDINR Today
The Indian Rupee (INR) extended its losing streak on Friday, marking its weakest level for the eighth consecutive session. The currency remains under significant pressure due to persistent US Dollar (USD) demand in the non-deliverable forward (NDF) market, a widening trade deficit, and slower capital inflows.
Key Factors Pressuring the Rupee
- Economic Slowdown:
- India’s HSBC Manufacturing PMI for December fell to 56.4, down from November’s 57.4, signaling a moderation in industrial activity.
- Slower expansion in new orders suggests weaker future production growth.
- Global Factors:
- Stronger USD demand, supported by a decline in US Initial Jobless Claims to 211K, below market expectations of 222K.
- Market focus on US December ISM Manufacturing PMI data and Federal Reserve official Thomas Barkin’s speech for further cues.
- Volatile Capital Flows:
- Bank of Baroda predicts a slight INR depreciation in 2025, driven by fluctuating foreign portfolio investments (FPI) and continued USD strength.
RBI Intervention Provides Temporary Relief
To curb the INR’s slide, the Reserve Bank of India (RBI) intervened by selling USD, with state-run banks reportedly offloading $800 million to $1 billion. While this provided short-term relief, the Rupee continues to face challenges from macroeconomic headwinds.
Outlook
The Indian Rupee is likely to remain under pressure as economic indicators point to a slowdown. Traders and investors will closely monitor the upcoming US ISM Manufacturing PMI data and global market cues to assess the Rupee’s trajectory.
Disclaimer:
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