December 27, 2024
New Delhi, India
USDINR Today
Rupee (INR) continued its decline on Friday, nearing an all-time low. Persistent USD demand from importers, foreign investors, and oil companies kept the local currency under pressure.
Key Drivers of INR Weakness:
- Strong USD Demand: Month-end requirements from importers and foreign investors bolstered USD strength.
- Low Trading Volumes: Year-end holidays led to subdued market activity.
- Global Economic Pressures: Slowing FDI flows, weaker manufacturing export growth, and narrowing policy rate differentials with the US.
Economic Insights:
India’s economy is projected to grow at 6.5% in FY2024/25, closer to the lower end of the 6.5%-7.0% range, as per the Finance Ministry’s November report.
Foreign Institutional Investors (FIIs) sold shares worth ₹2,454.21 crore on Tuesday, indicating reduced capital market participation.
Market Expectations:
A Standard Chartered Bank report forecasts moderate INR depreciation, expecting the exchange rate to reach 85.5 per USD within 12 months.
U.S. Economic Data Impact:
- Initial Jobless Claims: Declined to 219,000 for the week ending December 21, below the market consensus of 224,000.
- Upcoming US Goods Trade Balance data for November could influence global market trends.
RBI’s Role:
Routine interventions by the Reserve Bank of India (RBI) may help cushion the INR’s fall, limiting excessive volatility in the foreign exchange market.
As year-end trading concludes, the Rupee remains vulnerable to both global and domestic economic shifts.
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