August 28, 2024
New Delhi, India
USDINR Analysis
The Indian Rupee (INR) continued to face selling pressure on Wednesday’s Asian session, weighed down by weakness in other Asian currencies and increased month-end demand for the US Dollar (USD) from importers. Despite these headwinds, the local currency found some support from positive domestic markets and recent dovish comments by Federal Reserve Chair Jerome Powell at the Jackson Hole meeting.
Market Dynamics:
- Asian Currency Weakness: The decline in Asian peers has put pressure on the INR, adding to the broader regional weakness.
- USD Demand: Month-end USD demand, particularly from importers, has further weighed on the Rupee.
- Upcoming Fed Speeches: Investors are closely watching speeches by Fed officials Christopher Waller and Raphael Bostic later today for potential market-moving cues.
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Key Economic Events Ahead:
- US GDP Data: The advanced US GDP Annualized data for Q2 is scheduled for release on Thursday, with projections indicating a 2.8% growth rate.
- US PCE Index and Indian GDP Data: On Friday, the US Personal Consumption Expenditures (PCE) Price Index and India’s GDP data for Q1 of fiscal 2024-25 (FY25) will be crucial in shaping market sentiment.
Daily Digest Market Movers:
- IMF Growth Forecast: The International Monetary Fund (IMF) has projected India’s real GDP growth to reach 7% in 2024, maintaining its status as the fastest-growing major economy.
- Indian Economic Growth Concerns: A Reuters poll indicated that India’s economic growth in the April-June quarter might be the slowest in a year due to reduced government spending.
- US Consumer Confidence: The Conference Board’s US Consumer Confidence Index climbed to 103.3 in August, marking a six-month high and reflecting resilient consumer sentiment.
- US House Price Data: The US House Price Index fell by 0.1% month-over-month in June, slightly better than the forecasted 0.2% increase, indicating some cooling in the housing market.
- Rate Cut Expectations: Futures markets are pricing in a 34.5% probability of a half-percentage point rate cut, according to the CME FedWatch Tool.
Despite the downward pressure from regional currency weakness and increased USD demand, the Rupee may find some respite from positive domestic cues and dovish expectations from the Federal Reserve. However, key economic data releases later this week, including the US GDP and Indian GDP figures, will likely be pivotal in determining the near-term direction of the Indian Rupee.
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